Tereon International's Tenor MP 356 and 353 both feature 65000 colour OLED screens less than three centimeters across, in a package around three cm by six cm. The movies they play are in WMV format, according to Tereon (though the company confusingly refers to the products as 'MTV MP3 Players', apparently using 'MTV' to mean a music video). They play MP3 and other audio formats, have a voice recording function, JPEG display ability and FM radio. More details on Tereon's website (which isn't as attractively-designed as their products, unfortunately), here.
The OLED display is bright, and the video playback seemed smooth. However, to state the squintingly obvious, this is an extremely small screen - approximately one inch (2.54 cm) across. Pixels and aliasing are clearly visible when the image is still, though it looks quite a bit smoother when video is playing. I didn't get details of the screen resolution form Tereon, but Dan Rutter of Dansdata.com published a hands-on review of a similar product from Geil recently. He reported that the resolution was 96 x 64 pixels.
Terrence Wang, of Tereon, said that the products can play movie files continuously for 12 hours on one charge of their internal Li-on batteries. Note that you probably wouldn't be able to fit 12 hours of video into the available memory. Note also that if you stared at a one inch screen continuously for 12 hours, your next move would probably be to stumble off and find an optician - relying only on your sense of touch.

The units don't have any kind of removable memory card; they use a USB 2.0 connection to transfer video and audio files to a PC. They have tiny built-in speakers (and a headphone socket, of course). The silver, robotically-styled MP 356 actually has two speakers. One of them, on its 'head', pulls off to reveal a full-sized USB plug - so no USB cable is required. Internal memory is from 128 megabytes to 2 gigabytes, depending on customer requirements. Though, personally, I'm not sure if chip supplies make 2 gigabytes really practical in such a small device right now.
Wang said he expected the 256MB version of the MP356 would sell for around $120 to 150 at retail. Interestingly, Wang also mentioned the FOB (Freight on Board) price. That's the price that an importer will pay Tereon if it buys in large quantities and handles shipping from Taiwan (or perhaps China). Anyway, the FOB price is a mere $55. It's remarkable that Tereon is able to pack this much technology into these units, sell them for $55, and still make a profit. Remarkable too, if you weren't aware of it, how much of this kind of product's retail cost is added after manufacturing is finished.