Zodttd has updated VLC4iPhone.

Changes:

Turning off audio with –no-audio set to ‘on’ will remove all audio decoding with a huge increase in performance on many videos, making some videos that weren’t playable before.
–ffmpeg-lowres will greatly improve performance by decoding video at a lower resolution, at the expense of visual quality.
–ffmpeg-skip-frame will skip B frames if turned on.
–no-drop-late-frames will give smoother playback by not skipping frames. If you turn this on, audio won’t sync properly if there is slowdown.

http://www.zodttd.com/blog/2009/01/16/vlc4iphone-gets-updated-to-v190/