have you tried the following method
http://www.bigasoft.com/articles/how-to-convert-and-play-video-on-ipad2.html
with it, you can easilly play AVI, WMV, ASF, AVCHD, RAD, BIK, DivX, MKV, MOD, TOD, MTS, VOB, MPEG, MOV, MTS, MT2S, RM, 3GP, FLV, F4V, WebM, 3GPP and more on iPad, iPad 2, iPhone 3G, iPhone 3GS, iPhone 4, iPod, iMovie, iMovie for iPad/iPad 2, iMovie for iPhone/iPod touch, Final Cut Pro or Final Cut Express