I believe it occurs with both MP3 and AAC+, the two stations I normally listen to, but I'd have to test and confirm. I'm using the Android engine. Thx for the long press tip, I will try that next time.

Same issue here. Galaxy Nexus Wifi performance becomes very bad when the screen is off. It disrupts streaming, but also any other traffic - downloads stall or fail, Market updates stall or fail etc. Very annoying. There's a bug at Google: http://www.google.com/support/forum/p/Google+Mobile/thread?tid=1bbb6dcd335d9525&hl=en

I am using 128+kbps streams, lower bitrates might work better (haven't tested). Sometimes it will play for some time (the best I've done is 20 minutes or so) before having to rebuffer, but most of the time it only plays for a minute or two before reconnecting.