A brand new, free, iPhone 5-friendly player, Directplayer (AppStore link), has recently been approved in AppStore that has both AC3 and 16:9 (iPhone 5 / iPod touch 5) screen support – something painfully missing from currently accessible AppStore apps. For that matter, I think there is simply no player in the AppStore any more doing the same at the same time. The only app that officially has AC-3 support (meaning it'll never drop it), CineXPlayer, still hasn't got a 16:9-friendly update. (The current version, 2.8.2, was released in early August. No wonder it doesn't make use of the 16:9 screen.) On top of that, it's free.