Long time lurker first time poster -- and yes I joined so I could start posting about this Netflix/Atv2 problem.
The problem is not fixed with the new update. Plus, I was given a replacement apple tv today from the Apple store and still the same problems.
To anyone who thinks they are unconcerned about the stuttering and pausing issues, and anyone else having these problems, start calling Netflix and ask them what connection speeds you have actually been getting with which devices.
I have been working with Netflix and Apple Care for over a week with this streaming issue. Here is what Netflix and I have consistently found.
(I have 20mb Verizon FiOS service and use a time capsule for my network and have methodically used wireless and wired connections)
Macbook Pro - we have tested my connection speeds multiple times of day and night and I regularly get 12-20mb/sec bandwidth connection speeds.
iPhone - same tests and consistently get 10-18 mb/sec connection speeds.
AppleTV2 - same tests, over and over, day and night, .25-1.2mb/sec. THIS is the problem. Netflix tells me that at 1.2 mb/sec the service will start pausing and having aud/vid sync problems and connection problems.
This problem with Apple TV/Netflix has been consistent from the day I bought the ATV2 three months ago. It works sometimes and we can watch shows, but sometimes a show that is 30 minutes may take 1-2 hours to finish because the stops and starts.
I see threads all over the net about this issue and even the people who say they don't have problems admit that it pauses a lot. Those people should start calling Netflix and find out their actual connection speeds and post them in my opinion.
Netflix sounds pretty bummed about it when the talk to me because I have told them I have the service because of the ATV and will probably cancel because it is mostly unwatchable. I would look for another device, but I use my ATV2, plus my old ATV to network several stereo systems and I really like AirPlay so far. I would rather this damn Netflix thing just worked right.
Cheers.