cienega : that depends about your AV setup in your living room. If you have some nice player connected to your TV (like Boxee), it might play the video directly from USB memory stick. If you have just regular DVD player, you must create DVD Video disc from the AVI.
@ cienega
Vlc_help implicitly asks this : is your DVD player "divX compatible" or not ?
It should be written in its documentation (and on the outside box)
If you read "divx playback", then you don't need to create DVD video disc from your avi
I used to have a cheap DVD player (LG brand) that was "divX compatible"
Then I was able to see dozens of avi files, after burning them on DVD's (data DVD, not Video DVD)
Soon it became boring to burn DVD's so I bought an even cheaper DVD player (LG brand too) that had USB support and was of course "divX compatible" (or I won't have bought it)
So now, I just copy the avi file on the USB memory stick, then plug the USB stick directly in the DVD player attached to TV (though there are some limitations concerning the maximal resolution of your avi/divx file, as explained in the DVD player documentation)
As you see, it's very important for you to check first if your DVD player is "divX compatible" or not.
Because if it's not, then converting AVI to VOB (during the mandatory Video DVD creation) will take a long time, much longer than a simple copy of your avi file on a usb memory stick, directly readable on your "compatible divx" DVD player
Good luck