Convert Andorid Phone to Media Player (like iPod)

Hi,

I have Xperia X10 Mini working rock solid with MiniCM10 and nAa JB 5 kernel.
I want to convert this device as Media Player (iPod) as well as can use it as second camera and backup phone.

This primary usage will be as Media Player. Hence kindly suggest following

1. A good Media Player app for Xperia X10 Mini (600mhz/256MB Ram, screen < 3")
2. How can i cut down the memory load to give lag free experience in media player.
3. Suggest some light weight launcher, or how can i make media player to comeup as default instead of launcher.

XBMC doesnt work on the device, any other options?

Kindly pour in your suggestions.
Thanks
Viny