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Haven't seen many DVD players that do that, but there are plenty of Blu Ray players that will. We have a cheap LG BD-530 that plays anything I throw at it, even 1080p mkv.
Yup, I'm continually surprised at the things my LG devices will play from USB.
If you don't care about discs anymore period you might want to check into a player like the WD TV Live, we've got a few in the family and everyone absolutely loves them. Two USB ports so you can pretty much plug in any storage device you want. I haven't found a file yet that the WD TV won't play happily.
Like AVI, etc is what I want. Don't want to burn discs anymore..
What would you guys look at?