I tried several of the video player extensions available and I found "Flash Video Gallery" fit my needs the best. It's very easy to install, configure and use. I really like the playlist and the ability to use your own still image as a thumbnail. It can be easily copied so you can have mulitple players each with their own unique playlists.
My feature suggestions would be:
1. If only one item is in the playlist, have the option to collapse the playlist so only the video player is displayed.
2. Add option to play video full screen.