I was really surprised to see this in the app store, but now you can legitimately sync and watch Xvid files using CinexPlayer on the iPad. It syncs your files directly through iTunes.

Best part is it's totally free, and lets you watch movies attained through sources not affiliated with the iTunes store on your iPad. I don't know how long Apple will keep this on before they get cold feet, but for now its all pretty damn cool.

Biggest drawback thus far is that it does not support either MKVs or anything encoded with AC3 audio.

http://itunes.apple.com/us/app/id384098375?mt=8

Have fun!