£30 should get you a RockChip Mp4 player in the UK if you shop around.
This would play Mp4 (.avi) videos and have a miniSd memory slot. These Mp4 players are very stable and offer the best value for money at the moment and have 3.5mm sockets.
The sound quality is as good if not better than an Ipod.
Ebuyer.com recently had a 2Gig for £30 and 1Gig for £20 which you can add a further 2gig to with a miniSd card.
If you decide you want to buy from Ebay be careful of scammers and have a look at the advice on this forum.
This player is a RockChip, but is £39.99 inc vat:-
http://www.ebuyer.com/UK/product/128646/rb/0