I recently spent a stressed 24hrs with WIDE eyes and beeds of perspiration on my brow because after I upgraded the firmware of my PS3 from 3.73 to 4.00, non of the video content on my DS was playable, all the video files came up as UNSUPPORTED.
90% of the content I use is marked as AVI (just a container for whatever real formating is in the file I know).
It looks like the root of the issue is that the new version of the firmware treats the DivX codec differently (you need to register the device, yadda yadda yadda ...).
Well shock horror gasp, if after you do setup your PS3 as a registered device the files are still reported as UNSUPPORTED. So just 5 mins before I put the PS3 up on flea bay, one gem of info. Floated past my eyes on a website.
So if you end up in the same position (which you will as soon as you upgrade past 3.73).
Here's a tip.
When you rename an .AVI to a .DIVX the PS3 suddenly takes a deeper look at your file, looks inside and decides it's going to try and play the file afterall. The file no longer turns up as "UNSUPPORTED".
This worked for me and I thought I'd spare anyone else the stress.