I don't know if anyone else bothered posting this, but if you have a video file in a playlist and you sync it to your iPod Touch (the video and playlist), you can play the video in the music app.
You can watch it vertically, horizontally, or just double click the home button and hit play to listen to it while you are in other apps.
You can watch it vertically, horizontally, or just double click the home button and hit play to listen to it while you are in other apps.