Positive. I've been streaming audio/video over O2's network for quite some time, my old E90 could handle it fine as well.

There's a trick to using iPlayer without it jerking, by starting a video, letting it play for a few seconds in it's small little embedded window, *then* maximising it.
Additionally, when viewing over 3G, using the low-bandwidth wii version of the player helps keep it smooth, available here:

http://www.bbc.co.uk/iplayer/bigscreen/

(toggle the lower bandwidth option in the page's settings)

The APN username in use might also be a factor - i'm just using the o2web username (with the mobile.o2.co.uk APN address) and it works fine, but you may want to try changing the username to bypass - This will give you a connection that bypasses O2's image compression within web pages (using the standard o2web or vertigo usernames passes all web traffic through their filters that slightly lowers the quality and size of images), which may or may not help you - As I said though, audio and video streaming work fine for me with the o2web username.