One of the earlier firmware updates addressed an issue with Netflix pixelization, I believe. Does the player prompt you that there is an update available, and have you applied it? However, from what I recall, this was severe pixelization, to the point of not really being able to see the movie. Yours sounds more like a low bandwidth situation. I don't know if perhaps you contacted Netflix support whether or not they would be able to see what is happening from their end - they may be stepping down the video quality to meet the available bandwidth.
