“…Because while HD video is nice, I’m thinking it’s not much use unless you have a high resolution display, and that kind of screen alone could easily drive up the price of a portable computing device like this.”

I have a Nokia n810 which is the spitting image of the prototype shown. HD would be completely irrelevant on the 800×480 display that is on the unit. That said it is perfect for playing transcoded video. Even if the system could play HD the storage needs for an HD stream would be ridiculous, as well as the required storage device bandwidth. On the other hand transcoded video is very compact and thus well suited to small (relatively) slow flash.

Even though low resolution displays on devices are pointless with HD content, having HD playback is convenient because there would be no conversion needed. It is time consuming to transcode video files. Finding compatible codecs and file formats is also an ordeal for many portable devices.

Another convenience of having HD playback is being able to hook up devices to larger displays without having to sacrifice quality of converted videos.

Nvidia is making a big claim and I won't believe a $99 MID until I see it.