It does play Divx, although it could be smoother. The device itself is capable of doing quite a bit better than its stock OS is doing, and we are hoping that the release of Mer on this device will allow optimzation of video and better performance. It plays audio very nicely (I believe it has a Wolfson audio chip), although it won't be replacing your video PMP player performance (especially with chips like the new CC1600 out there for PMPs) any time soon. Since I haven't received the device yet, I can't give you framerate and format specifics, but I think Chippy has done some testing in this regard. Chippy did say that it supports Divx and if videos are converted to work on this device that it performs adequately.
For those of you who want a really good PMP that has a TXT only ebook reader, MP4 Nation carries quite a few from 7" and smaller screen sizes. If video peformance and a low price point is your thing, check out the PMP devices with the China Chip 1600. There is a device called the Chuwi M70 Plus with 8GB and 7" screen that plays videos flawlessly and also has decent ebook functions, but only reads TXT format. The OS is NOT good at all. It has Cirris Logic Audio chipset and supposedly sounds really good. It can play 720p at 30fps and has a very long battery life. Of course, HD video makes the battery run out sooner, I think HD video will still last for 5-6 hours of battery life. Some of these devices have a transreflective screen as well. You just have to look into them and be ready to only use TXT format for ebooks. Here is an example of the PMP I mentioned:
http://mp4nation.net/catalog/index.p...6bb9fc60c50599
Regards,
Cold