Does it play MKV files?

The native player does play MKV files, but note that MKV is just a container format which can contain various codecs, only a small subset of which the Samsung Galaxy S can play.

In particular, it cannot play MPEG-2 encoded video at all. It also cannot parse any MPEG-2 Program Stream containers.

It can play MPEG-4, H.264/AVC, Dolby Digital (AC-3) and MPEG Audio Layer III (MP3), but also not in all possible variations. E.g. it cannot play some H.264/AVC options. It can play H.264/AVC streams with CABAC, but possibly not with B-Pyramid.

I found that to convert MPEG-2 videos, I can use ffmpeg with the options "-sameq -acodec copy" and specify an output file with .mp4 ending. Then ffmpeg will transcode the video to MPEG-4, copy the original audio stream and put it all in an MPEG-4 container - and so far, the Samsung Galaxy S can play those files. Only when the original file contains an LPCM stream (uncompressed audio), this will not work. Dropping "-acodec copy" fixes this, resulting in the audio to be transcoded to MPEG-4 AAC.

you can also try the following solution: http://www.bigasoft.com/articles/how-to-convert-video-to-samsung-galaxy.html

it enables to easily play any video format including AVI, MKV, WMV, RM, FLV, MOV, Xvid, DivX, 3GP, WebM, VP8 and more on Samsung

i just find another guide is more preferable, it introduce a detailed guide on How to Convert MKV to Samsung Format to Play MKV, HD MKV on various Samsung Galaxy Phones including Samsung Galaxy S/S2/Infuse 4G/Tab... at http://www.bigasoft.com/articles/how-to-play-mkv-on-samsung-galaxy-s2.html