yes either convert the movies to mp4 format or download vlc player for free from app store cineXplayer is good also but is not free they both play xvid on the iphone
thanks for the vlc tip ! Just did it and it works great, vlc app gives you step by step directions on adding current videos on your computer to your iphone4. No more need to convert files. Thanks again
just make sure the video format supported by iPhone, most downloaded movies are flv or f4v, you'd better converter them to h.264 mp4, which can be played well by iPhone