There are three solutions to this problem that I recommend. Take your pick whichever one works for you.
1. Use a program like VisualHub to convert AVI files to DVD format, then burn a DVD. Works fine for SD videos, just very time-consuming.
2. Buy a DVD player that can play DivX/XviD files burned straight onto an ISO disc. No conversion time, no fancy menus but works great, and up to 12 hours on a single DVD. Again, terrific for SD videos.
3. Buy an Apple TV. You have to convert your videos to MP4, but apart from that they just stream wirelessly over to your TV. Works with HD video as well as SD (up to 1080i). Apple TV is the most expensive of the options ($200ish) but does a lot of other awesome things as well. Everyone I know who owns one (and that's a fair number of people once they see mine in action) absolutely loves theirs. Can even be "hacked" to play AVIs et al without conversion if needed. If your time is worth anything, $200ish is really not a lot to pay for a really enjoyable and hassle-free setup.