The renowned open source video playback app VLC has just returned to iOS after a very public withdrawal back in 2011. The app plays all of the file types supported by its desktop counterpart, including .mkv and .avi, as well as network streams, and includes Dropbox integration, support for subtitles, and variable playback speed. MacStories notes that it's also possible to adjust real-time video filters like saturation and gamma, and share files over Wi-Fi by uploading them through your browser.
While VideoLAN says that the app will work on any device running iOS 5.1 or later, you might encounter slow playback with certain files — speaking to MacStories, the project's developers explain that third-party apps can't use hardware acceleration for video playback without using Apple's own frameworks, so your mileage may vary depending on the encoding profile used. The whole project is open source (much of it rewritten to be compliant with Mozilla and GNU licenses), and you can download everything to take a look at how it works inside Xcode if you're adventurous. It looks like the app isn’t available yet in all markets, but it is free (as in beer) to download.