Video Playback Jumpy sometimes

I have a 2TB NAS with a 1000Base-T connection… Basically, when I am connected Via Wireless (802.11N) or the Gigabyte network video files will skip almost every 3-6 seconds. They audio plays smoothly but the video will hold the frame for a couple seconds. VIDEO_TS folders play nice and smooth and have no problems from what I can tell.

The NAS and the network are more then ample to stream the video. I have streamed video off of the setup to PC based HTPC’s but I was hoping that the AppleTV could replace the HTPC.

Is this a known issue/limitation. From my previous experience skipping usually means there is a lack of CPU power to decompress the video fast enough, which would mean that I am using codec that aren’t supported by the AppleTV hardware.

Could someone point me in the correct direction?

You can adjust the video playback cache in the DVD > Settings menu.