Nvidia released officially on 8. January 2009 their new x86 and x86_64 display driver for Linux.
There have been six prior Beta versions, which almost all were tested here. As of now Linux has an official support for hardware acceleration for H.264 / MPEG4/AVC encoded content, such as AVCHD (.mts, .m2ts, …) or Matroska (.mkv).

The VDPAU device brings the functionality to Linux, which have been available for Windows with its PureVideo for almost three years. The Video Display and Presentation API for UNIX is realized as a video output device, such as xv, xvmc or gl/gl2. In order to play a file with mplayer, that have to be patched first one have to start it on the command line for a Matroska video like this:

mplayer -vo vdpau -vc ffh264vdpau <my Matroska video here>.mkv

This Blog is full of articles with HOWTOs about that. Just click in the ‘Most Posted’ on the right side. Choose therefor tags like HOWTO, AVCHD or VDPAU.

A overview of Linux projects, which utilized the new device can be found here.

At the moment it seems that the “Error 25” (or Error 23 too) issue

Error 25 at libvo/vo_vdpau.c:992

haven’t been fixed yet. But this is more a matter of an mplayer patch, than the driver itself.
Looking into this directory at Nvidia’s server, there’s still no new mplayer patch set available yet. At the moment the last available version of mplayer-vdpau is still mplayer-vdpau version 3263604.
To workaround this problem you still have to follow these instructions.

The official release notes also states, that CUDA 2.1, preliminary OpenGL3.0 support was added. A few bugs have been fixed, and the “Sync to VBlank”, or they call it ‘sync skew’ should work now too. Also a bunch of new cards have been added:

• Quadro FX 2700M
• GeForce 9400M G
• GeForce 9400M
• GeForce 9800 GT
• GeForce 8200M G
• GeForce Go 7700
• GeForce 9800M GTX
• GeForce 9800M GT
• GeForce 9800M GS
• GeForce 9500 GT
• GeForce 9700M GT
• GeForce 9650M GT
• GeForce 9500 GT

For VC-1 playback you needed a 9300GS, 9200M GS, or a 9300M GS. Whether this fact with the above listed models has changed or not, it not clear to me yet. (Update to come).