Heck. Freakin’. Yes.
VLC is one of the greatest pieces of media playing software around and it has been successfully ported to the iPhone!
Currently vlc4iphone is only been released to a select group of beta testers (ie. people who’ve given this guy money), but hopefully there will be a more public beta release soon.
Codec support is limited to MPEG / MPG, AVI, MP3. However, the developer (zodttd) is planning on adding support for FLAC, OGG, and is also looking into supporting VCD, DivX, WMA, WMV.