My N70 is running on firmware V2.0536.0.2, 12-09-05, RM-84. I'd bought it the week it came out here in India.
My N70 doesn't have any problems with video playback from the gallery. You get to see the first frame of the video in the gallery (the video's icon, so to speak). Pressing on the video with the "accept" on the D-pad starts realplayer, and the video starts playing. The "2" keyboard shortcut to play videos in lanscape doesn't always work, tho.
I didn't know they had released a new firmware for the N70. Nice to catch something new here, right from my first visit!
And Paul, this phne is really a good phone. I haven't had any problem with it since I bought it. It is somewhat slower than my old N6630 (and I regretted switching from it to the N70 for the first week), but otherwise the N70is quite a good phone. Best form factor of Nokia's Series 60 offerings. You might consider the N6630 for your f-i-law if he is'nt too particular about sending his face while video conferencing and doesn't mind a (slightly) lesser quality cam. I still think the 6630 is way more value than the N70. I shuda waited for the N80 :-(
Just my two cents:-)
"Monday is the root of all evil!"