Ok I've got this one solved for anyone who needs it. This Info came from schaumkeks over on the Ubuntu Forums. This is almost a cut and paste of his original text, with a couple changes. For example he was using nano, and I changed it to gedit. I listed it this way, because this is what I used, and this is what I can verify worked. His example uses VLC, but this should work for your video player of choice.
"Because there are not many applications that are already shipped with a desktop file for the new mime types, we have to do some manual work.
An easy approach with VLC as player for Video-DVDs without messing with any existing system files (I've seen some cruel hacks in the forums) would be the following:"
Create an alternative launcher for VLC in the systems overlay directory (different name or we would override the original):
$ sudo cp /usr/share/applications/vlc.desktop /usr/local/share/applications/vlc_video-dvd.desktop
Edit the copied file (with sudo gedit or your preferred editor):
sudo gedit /usr/local/share/applications/vlc_video-dvd.desktop
and add or change the following entries: Exec=vlc %f
With this line VLC appears in the Video-DVD list in nautilus preferences:
Hide this entry from the applications menu: NoDisplay=true
Finally, update the desktop-database to make the entry visible:
Edit: Just out of curiosity I'm surprised nobody else has posted up here on this topic. I guess you are all happy with Totem as the default. I'm now enjoying SMPlayer, and it's really nice to watch my DVDs auto load and play in it by default.