The Treo 650 has a very loyal following including developers who are continually adding cool applications to the Treo, including media players. A friend of mine owns a Treo 650 and pointed me to a new Treo media player called the The Core Pocket Media Player (TCPMP) that supports many video formats: .AVI (DIVX/XVID), .MPG, .OGM (OGG media video) and .MKV (Matroska). It supports Xvid, Mpeg4-SP, Divx, MPEG1, and more. The popular Treonauts blog has more on this bit of news (including screenshots) and makes this important point about not having to re-encode the video file to fit on the Treo 650's small screen (the media player does all the work for you):
The best part is that our days of having to re-encode each of our video files for playback on a 320x320 or other small handheld screen size are gone. That's right, you have to do exactly zero, nada, niente to playback any video currently on your hard drive and view it on your Treo. Just copy the file to your SD card and you can start watching it.
Relatedly, my friend also recently signed up MobiTV for his Treo. MobiTV offers a couple dozen channels of television over IP for $10 per month. He compared it to the actual TV and told me that it seems to be about five minutes behind, but the quality is pretty good. I think now I am torn between getting a Treo 650 or the new HP6515 that I recently drooled over.