One of the hardest parts about doing video on the Internet in the past has been knowing what video format to use. With the rise of video sharing sites like youtube the answer these days seems to be Flash video. It is very easy to create Flash videos and display them using FFMpeg and a free player.
Here is a tutorial on how to create the Flash video files: One-stop Installation Guide for Create a Linux Server-side FLV conversion environment.
Here are a couple free Flash video players:
You can also create your own Flash player if you like either with the Flash studio tools or something like Ming. For simplicity I would recommend using FlowPlayer to start with since it works well, is completely free, and has a number of features that can integrate with meta data in the Flash video.
Now go make the next youtube.