yes, .vob playback needs more resources and running it on mobile device is too much. while playing with command line cvlc, few options give acceptable performance.

cvlc --ffmpeg-hurry-up --ffmpeg-skip-frame=1 --ffmpeg-skip-idct=1 <video_file.VOB> (http://wiki.videolan.org/VLC_command-line_help)

I am planning to overclock my device to 850Mhz. Will update this forum for same video playback speed.