I use VLC Player for many years.
Recently I tested in on a Intel E5300 / 4GB RAM PC.
I tried a 1080p movie, but on complicated scenes it freezes.
The CPU was nearly 100%. I thought that VLC will detect my GeForce 220, and use it to decode movies. After searching the internet forums, I realised that VLC does not support DVXA or other.
I tried Media Player Classic Home Cinema.
Totally no lag on the movie and CPU utilization ~10%.
You can get it here
All this was on Windows 7 - 32 bit
Update: From some time VLC now supports GPU Acceleration, although it is not enabled by default I think.... It is working perfect for me!