(Oh iPod... Why does your bluetooth suck so much?)
One of the better features in iPhone OS 3.0 was that it enabled you to use the Bluetooth module hidden within second generation iPods (and of course third gen now). Although I was initially excited at this prospect, I realized quickly that I had basically no reason to use the Bluetooth - after all I don't have a Bluetooth headset and its not like Apple would ever let you sync it wirelessly to your computer... So, while the functionality was cool, I never really had a need for it until recently when I got a bluetooth enabled car stereo.
The prospect of having no wires running everywhere in my car to get my iPod to play over the stereo has long been a dream of mine, and now that I have it working, it's pretty amazing. Until recently however; I was stuck with choppy playback and a spotty bluetooth connection on my iPod - which after doing some Googling for 'iPod touch 2G bluetooth sucks' returned some interesting results. According to some users, the iPod was given a really horrible bluetooth module, so I was left feeling ripped off by Apple for putting in terrible hardware - after all I knew it wasn't my stereo since it would play music from my phone with no choppiness. I considered switching all my music over to my phone, but I kept reminding myself that, "No, I bought this damn iPod to play my music, and I'm going to use it."
So after doing some more reading, I discovered that bluetooth operates on the already crowded 2.4 GHz frequency, and as it turns out something else on the device runs in the same frequency - WiFi. So after reading some postings by people on a forum, I decided to turn off the WiFi and give the bluetooth some time to try on its own. Guess what! My music streams to my stereo almost completely uninterrupted and the connection almost never drops!
So the solution is surprisingly simple, just turn off WiFi when using bluetooth (unless you're already connected to a network).
I think the reason behind the choppiness is not due to the fact that the WiFi is being used but instead that the iPod scans for WiFi networks. If you notice, the iPod is periodically scanning for wireless networks in the background to connect to, and when it does so - the entire iPod lags up (not just the Bluetooth). Now imagine all the networks the iPod is encountering as you're driving down a residential street... And I think you might just see why the audio starts getting choppy :)