"Certainly I find watching movies on the Touch a great experience"

You are forgetting that you need to re-encode the videos. But with mplayer you can play almost all the video files. divx, flv, xvid. avi.

Now who the hell is going to encode all the files before watching the movies. I just download dvd rips and put them on my n800 and it plays very well with mplayer.

If you want to re-encode movies.... you can do it using media converter for the n800 and play it in media player. There you have all those functions like the slider etc!!