I feel exactly the same way. My PS3 plays video perfectly. Unfortunately it sounds like a jet engine, and when my kid's asleep I can't turn the TV volume up loud enough to hear over it.
Do u have the original (piano black) version. Agree that the fan is loud on it.
This Christmas I got the slimmer version at a great deal. And I must say that this runs pretty quiet
PS3 is definitely a beast when it comes to playing back videos. Even handles the interlaced stuff very well
Only thing missing. The ability to stream videos with DTS soundtracks.