I know there are loads of thread on this, but there's more to it than just hardware and using the latest Flash beta with hardware acceleration.
The problem is with the web server, more specifically simultaneous usage of while playing a Flash video.
I use the Boxee app on my iTouch pretty much exclusively to control Boxee. When I have the app running on my iTouch while a Youtube video is playing there's terrible chop. If I close the app and go to the homescreen on my iTouch it plays silky smooth. This is recreated at will.
I do not have this problem within Netflix/Silverlight.
I do not have this problem playing local media files (mkv)
Windows 7 64bit
Latest version of Flash beta both Active-x plugin and player
Latest video & chipset drivers
Latest version of DirectX
Core 2 Duo 2.9ghz
If you simply put the iTouch to sleep it takes a short bit for the chop to go away. I assume that is because the iTouch app doesn't actually disconnect from the web service until a certain timeout period. To get immediate relief from the chop I press the Home button to essentially close the app. Once I turn the iTouch back on and launch the Boxee app the chop returns immediately.