How to show own video in a player in a post?

I’ve created a WP 2.6.2 blog for a friend who is using it to show Youtube videos by embedding the YT embed code into the post. You can see how it looks at GirlOnGirl.tv (don’t worry, it’s R, not XXX, just kissing).

But now the site owner has asked how she would insert her own videos (her own or those uploaded to her by visitors to post) into a post, should she want to do so in the future. That’s beyond my expertise. Can anyone tell me how I would set up the blog to do this? What would be the format of the video to accept? Is there a player I’d use to display it? Etc.

Thanks.