The Good:

• It will play those old AVI of mine and those TV Episode AVI that I download once in a while when I miss a recording on my DVR.

The Bad:

• The application feel very beta.  This is understandable as the team wanted to produce a simple application and see if Apple would approve before investing major amount of time in something that might now get approved.
• Playback is a little blocky and even stutters at times.
• Sound level is low and hard to listen to.
• There is no easy way to delete files
• The video selection screen is awkward and does not allow to sort in any way.
• No streaming for now
• Ackward interface to load video via iTunes (thank’s Apple)

Conclusion:

For now I will stick with playing those AVI using AirVideo real time transcoding or simply use Handbrake to permanently convert the files to mp4 friendly files.  I commend the team for porting VLC to the iPad but for now I don’t see myself using it.