My Creative Zen plays .avi, but I've had him for a long time now and I'm not sure if the new ones still support it or what they're even called. But I've got nothing but love for the Zen, super easy to put stuff onto and use.
Check out the Archos line. I have an Archos 7 and love it. They play a ton of formats right out of the box (including AVI) and I rarely if ever have to convert anything. They also have a codec pack you can buy separately that will allow it to play some of the more exotic formats.
Check out the Samsung P3, you can find it for like $100 - $120 shipped, an 8gb model, many people compare it to the Cowon S9. The P3 has good sound quality and plays almost any music file and plenty of video files like .avi, divx., wmv., etc. It also has bluetooth built in if you need that.
i had not heard of any of these players, thanks for the suggestions!
Edit: The Cowon is very impressive, is there any store that sells it in store where i could try it out? The Archos is a little too big for my taste and expensive. Creative Zen seems like another solid option.
My only complaint is it seems everything is touch screen, which i do not really like. As someone who listens to a lot of podcasts and concerts, i find it hard to use the touch screen to skip through portions of the show if a segment gets boring or i fell asleep the nite before and i can't remember where i left off.
How is this thing so cheap? It seems to only hold up to 12GB which is a problem cause i have a 1TB Hard Drive filled with video and audio files, and i am fed up with the 16GB my ipod nano holds.
I am loving this Cowon J3, but its lack of WiFi is kinda dissapointing (coupled with the fact that ive never seen the device in person and i assume returning to amazon will be a HUGE hassle if i decide i don't like it)