I recently bought a KiSS DP-508 DiVx player to do pretty much the same thing.

http://www.kiss-technology.com/

I'm currently test ripping a whole bunch of DVD onto my server upstairs, DP-508 plugs into the TV and streams movies over 802.11g with no problems so far. It'll also streams mp3s, pictures and is a dvd player.

They're meant to be releasing a small form factor unit with built in 802.11g and then I'll put one in most rooms.

Changed my life about as much as TiVo and there's a pretty active developer community coming out with cool add ons - accessing imdb from the TV is pretty cool!

And SWMBO worked it out without any prompting

Phil