How can I watch MegaVideo/DivX videos on my jailbroken iPhone 3G? I'm looking for a way to play megavideo (flash) and divx on my iPhone 3G which is jailbroken. Flash seems to require 3G S and above (like everything these days sigh)

Should I be able to do this, I will be able to replace my Sky box with my iPhone, as I can get live TV on there through TV catchup and access my iTunes library, I just need to be able to stream flash and divx and I'm set.

I've tried imobilecinema and that didn't play any audio or video and openstream (vlc4iphone) didn't work either.
Flash does not run on any version of the iPhone. You can try using a program like Air Video which will live transcode your DiVX files into a format the iPhone will play back using your computer.

As for playing it natively on your iPhone, VLC (Video Lan Client) is working on a native client but it's not available in the App Store yet.