That is most definitely not the case. The applications that DO pause do it for two reasons: a) to conserve battery, b) to conserve a state (like the game example from other posts) on an interruption.
A big problem here is network caused delay. As funny as it may seem, my N900 stutters noticeably when there is FAST connection, my guess is that dowloading also uses the CPU, leaving less CPU for the actual playback. If you wait for the loading to finish, it's quite ok.
4 Youtubes at the same time stutter even on my 2.8GHz Core 2 Duo. Not sure about your point.
You mean stylus ?