I am big fan of cycorder video recorder. Recorder very well adds the missing feature of recording in iPhone 2G, 3G.
It really sucks at times when one records a video and try to play this and it displays a message that video can’t be played.
As of now there is no solution present as per my knowledge . There is some hope after seeing road map on Saurik’s site. It may take a month or two for the next release. So don’t delete your important videos, which are corrupted. You can be able to play them after a while .