So far, I haven't recommended nPlayer (initial review; second major article) for (at least high-resolution) MKV playback as its H.264 decoder is considerably inferior to that of the, in this regard, best players. An example of the latter is yaPlayer – which, incidentally, has still not been let back to the AppStore. (By the way, the other, also-excellent player, HD Player Pro, which was also removed some days ago because of their developers' “forgetting” to remove purely AC-3 support on Dolby's demand, has just re-emerged in the AppStore. Without AC-3 support, of course. See the just-posted update to my previous article. I've also linked to some MacRumors threads on the AC-3 removal question – it's widely discussed in the iOS community as it's an essential question for everybody interested in video playback. I also posted a warning on not updating to the recently released new version of the excellent and highly recommended iMedia Player as it quietly, without warning their users at all, also dropped AC-3 support.)
The software H.264 decoder of nPlayer has, unfortunately, a lot to be desired. For example, playing back 1080p video (e.g., the standardized Monsters test and benchmark video - it's HERE for download) is almost flawless (see Section 3 HERE) using iMedia Player's software(!!!) decoder on the iPhone 5 (and the iPad 4) but it severely stutters on exactly the same iPhone (iPad) when decoded in software with nPlayer. This is why I haven't recommended it for MKV playback - before the just-released version, that is.
The latest update adds hardware MKV playback to nPlayer, making it even more usable:
(the other updated app I show you on the AppStore list is an update of SloPro, an excellent video recorder when recording 30+ fps video on the iPhone 4S strictly under iOS 5.x and using the 720p resolution only. Please see the just-posted article update HERE for more info.)
I've tested MKV playback with all my standard test MKV's and found it flawless. The only problem I found was that, when rendering textual subtitles in an MKV file, the subtitles aren't hidden until the next one is displayed. This is VERY distracting. (This problem is certainly visible with the Monsters test video - give it a try!)
And now for the bad news: yes, nPlayer has also dropped AC-3 support in the new version. This, as has been pointed out in several of my previous articles, makes all MTS, all (US) ATSC TS, a lot of MKV and AVI files absolutely silent. Yes, AC-3 is essential unless you only consume Apple's iTunes Store videos. (In the latter case, however, you shouldn't even consider using third-party players – Apple's protected (DRM'ed) videos can only be played back in the stock Videos app.)
The previous versions of AC-3-capable players played back everything just fine – except for MP4 (m4v / mov) files with strictly AC-3 tracks only (example; linked from my first article announcing Dolby's targeting iOS developers with AC-3 decoders in their players). The new version, of course, is completely silent when playing back any AC-3-only videos.
That is, if you don't need MKV support but do need AC-3 (for example, for not hardware-acceleratable (M)TS playback), do not update to the new version. (And make sure you back up the old so that you can easily switch back to using it.) The previous, 1.3 version also already supported the wide screen of the iPhone 5 / iPt 5; therefore, you don't need to upgrade for plain 16:9 support either.
The new version, fortunately, has no problems of playing back MKV files with both an AAC and AC3 tracks; that is, if you do go for adding AAC tracks to, originally, AC-3-only MKV's, they'll become playable in nPlayer.