These days the need for processing power in increasing and unless you have a good configuration system you can not play 720p or 1080p movies,
But if VLC was to develop its own OS, Something like http://www.geexbox.org/, that would help a lot of users who have old cpu's and cannot play quality video because of their Operating System using a major portion of the processing power.
The only issue with http://www.geexbox.org/ is that they do not support all the video formats.