My pick for the best video player for Android is the rather strangely named BS. Player. Most video players on Android are plagued by video stuttering. However, this app incorporates hardware accelerated video playback. This is feature is essential if you want to be able to play HD videos on your device. Importantly, BS. Player supports a wide range range of video and audio formats, namely: avi, divx, flv, mkv, mov, mpg, mts, mp4, m4v, rmvb, wmv, 3gp, mp3. It only can also stream content via http and rtsp.
There is a Pro version of the player that costs $30 per year (this seems a bit steep). The features include being able download Youtube video in HD, and a networking buffering where the entire movie is loaded into RAM.
Link: BS. Player