This is not a feature that comes off the box with the iPad but thanks to an application called OPlayer HD, you can watch DivX movies (and many other formats) right on your iPad.
OPlayer HD allows you to transfer your DivX over wifi or via USB and it is even possible to download them directly from the web browser. The downside? All movies will be played in 800×600 or lower.
If you decide to try out this app, I recommend you make sure to turn ON the Skip Frame option in the settings. All in all, it seems to be a great app for those of you who watch DivX videos, and it will most likely save you time converting those movies into mp4.
You can download OPlayer HD from the App Store for $4.99.