I’ve been using XBMC on my media centre for a while, and I’m very happy with it. One of the many cool things it can do is use the graphics card to do all the heavy lifting during video playback. That’s essential if you’re playing video at 720p or higher resolution.
The technology is called VDPAU, but it’s not switched on by default.
On Ubuntu, you’ll need to install an extra package: libvdpau1 (you need to be running Lucid or later), you’ll also need a 8XXX or later Nvidia card, and the restricted drivers for it. The Nouveau driver is no good.
Once you’ve installed that, fire up XBMC and go to Settings > Video > Player and change the render method from “auto” to “VDPAU”. You should immediately go from horrible jerky playback to nice silky smooth!