The iPhone is, at this point, effectively an open platform. And if I were to get one, I would try to fill it with all my favorite ported open source software, despite the upcoming app store. VLC is one of my favorite applications — period.
As we mentioned a week ago, VLC is being ported to the iPhone. This means support for just about every video and audio format under the sun and plenty of other handy features to boot. FLV support? Subtitles? Yes, please. I doubt it’ll be quite as slick as the built-in player, but it’ll make up for it in Swiss-Army-style good-at-everythingness.