I managed to miss the replies to my post.
I personally managed to fix it my switching to the vdpau decoder. I previously was only using this for HD content and not SD.
The buffer shown under playback date is still very low but it seems to be just enough to keep playback smooth.
On a slightly different subject occasionally when watching (high bitrate) bluray content there is also an odd stutter, say once or two during a film so it's not a major issue. I think this is linked to the buffer as well. It's just a pity that the read ahead buffer can't be changed.