I have several media players installed including VLC.
I agree VLC is a fairly plain looking piece of software but I use it to play all kinds of video file formats.
So I use Winamp for music because I like the look and the various skins and visualisations(symplicipod is my favourite) and the sound is fine plus there is a FLAC addon.
Winamp does play video but I've found it to be a bit picky when it comes to video formats.
Consequently I use KMPlayer for movies but that doesn't play everything so if it won't play in anything else it'll play in VLC.
I use WMC with my TV tuner and for streamed TV.
Truth be told I usually go with VLC for all video/movie formats. It's ugly but you only have to look at it for a few minutes and then you're watching a movie so you can't see it and it plays virtually any file format.
I've not had any issues with conflicts.
Hope this helps, John