I would suspect the video card or processor speed of your viewing computer -- or possibly some other programs running in background that are strongly competing for the CPU cycles. I find that my older computers -- those more than 5 years old -- often get some hesitation when viewing. I am able to minimize this by changing the "auto" setting for video resolution in the viewing window to a lower resolution. I sacrifice some resolution for smoothness, which I find more tolerable.
I don't think it's that. As an example, I've tried it on 3 different computers, the least of which was a laptop running an I5 processor. The other two are desktops, both running I7 processors. I can use these same computers to run buttery smooth high definition video encoded in the very difficult AVCHD format. I've also got a very fast internet connection courtesy of FIOS.
So it doesn't look like the computer is at fault. Perahaps I should explain what I'm seeing. This is not a stopping of the video and resuming, it's a very subtle stutter. You can best see it with lots of motion or something as simple as the tickertape on some of the financial channels. Watching the tickertape, it will run smoothly for a couple of seconds and then there will be a very slight stutter as the ticker resumes. If you're just watching a talking head on that same channel, you'll never see it.
So if anyone gets a chance, I'd like them to tell me if watching tickertape (I'm using this as an example as it's so easy reproducible) runs as smoothly as if they were watching their TV directly. To my eyes it's almost as if the video is at a somewhat reduced framerate.
BTW, it's much worse on my new Galaxy Nexus on Verizon. Whether I'm hooked up to 4G or WiFi, the stuttering is worse and pretty obvious. Seems to me this is inherent in Slingbox as it's hard to believe that viewing on 4 different devices on different data networks, the result is the same.