The MediaGate MG-25 is a 2.5" hard drive enclosure, that can be connected to a TV to play back DivX and MP4 files. This small box can output video up to 1920x1080i, so the video should look pretty good. It also plays MP3 and OGG files, as well as displays graphic files.
One downside of this is that it gets its power from the USB port, so it will have to be plugged into a computer to be run. It doesn't look like it can be used as a standalone device. I would love it if this has an ethernet port, where the content could be copied over across the network, and this could just be connected to a TV.