Reading around it seemed a memory card may be the way to get around these IO issues and N900 becoming unresponsive when downloading.

Happy to report this is true!

Bought an 8gb transcend micro sdhc, stuck it in, formatted using file manager, changed setting in transmission (2.04) to download to sd card and voila, now no issues at all and performance is as good as uTorrent on PC!!!

Now to learn how to configure the card properly and get Nitroid installed...