Well, it gets better and better for me.
Netflix has worked flawlessly since I got the ATV2 UNTIL the 4.2 update. After that I started to get the stuttering problem as well.
I found that once, after power cycling it worked for a whole TV show but for the most part it was still having issues.
I went to watch something tonight and it started stuttering. I power cycled and the thing came back up but when I go to Internet, Netflix, MLB and NBA are all non-reponsive. In addition, after this power cycle it installed version 4.2.1.
What's even worse is that Netflix locks the ATV2 and then reboots it.
Like others, Netflix works fine on all other devices in my house (Wii, Xbox360, iPad, iMac, MacBook Pro, Win7 pcs...).
Apple screwed something up here.