Gadget Universe has this Home Theater Watch for $149. What do you get for your hard earned dollars? It has a 1.5″ screen with 260k color display. It also has 2 GB of memory to hold your media – which is reasonable for a watch. You can play MP1, MP2, or MP3 and WMA audio files, and allows you to view JPEG images. Being a home theater, of course videos can be played as well. The included software will convert your ASF, AVI, MPEG, WMV, DAT/VCD, and ASX files to the format required for the watch. Just plug the watch in as you would any other USB device.
You can make up your own mind about whether a 1.5″ is large enough to be worthwhile, even if it is “a stunningly LARGE 1.5 inches” per their web page. I also didn’t see anything on the site about how they are supporting 5.1 surround sound.