Instructions
Insert the USB flash drive into the PS3. The flash drive will work from any of the four USB ports on the front of the PS3.
Scroll to the "Video" option on the main menu of the PS3.
Scroll down and move the cursor over the "USB Drive" option.
Press the "X" button.
Press the "X" button again on the "Display All" option. This will display a list of all of the video files on the flash drive.
Select the cursor over the MPEG file that you want to play and press the "X" button. The movie will immediately begin to play.