What is your network setup and what type of movie that you want to play?

Streaming MKV via Wifi is quite laggy. Go to Transcoding settings and look for "Video Quality Settings". Under Mpeg2 Video quality settings, change the value from drop down menu and select the value that you want. You might need to play around with the value until you have the best settings for your setup. My settings is "keyint=25:vqmax=5:vqmin=2  /* Good quality for HD Wifi Transcoding */" whenever I want to stream MKVs thru Wifi on my PS3.

you hardly will see avi and mp4 lag in PS3 media server because it doesn't need your PC to transcode it, your PC will just pass everything to your PS3 and let it do the job, thus it is faster.

but i think the max resolution for wifi transcode with good quality while not lag would be 720p, wired connection is always the best