Depends on the player. Media Player supports a small list.
Core Player supports a bigger list which includes DIVX. That was the big thing for me. A full movie in Divx will be around 350Mb and is good quality. There are other players out there including Pocket TV
You have to read each players specs to see what they support and know what you want to view. Divx is a .avi file, but you must remember that there are many avi file types. The difference is what codec was used to encode them. Media player won't play a Divx encoded avi file. It actually plays the audio stream, but the video is not there.