If you are playing divx/xvid then Rock Player is a good app. If the movie isn't fitting the screen properly there is an on screen button that will toggle through several different sizes and aspect ratios.
My video library is xvid, I have not thoroughly tried other formats, but they probably will work. I know the stock player is better with mp4 than Rock Player.
My mistake, I didnt read post correctly... You are looking for a player, I found a real nice one, I think this one rivals RockPlayer and for a better price, the application is called Meridian Player (I know a strange name )but I downloaded the trial and I am really considering buying this one.... Its only 2.99 compared to the 9.99 for Rock Player. Another nice feature this player can play in Landscape and Portriat mode.... Give you a little more control of your device.