The WD TV Live is by far the best media player I have tested. It can handle pretty much any file format and has no problems with 1080p movies, not even 1080p 3D movies.
Keep in mind that to be able to play 1080p over the network you need to make sure that you are using wired gigabit Ethernet (wireless _could_ work) and have a server that can handle high read speeds.
I have not been able to stream the 1080p 3D movies successfully over the network so I have to copy them to a locally attached USB drive.
