ABC and netflix have always looked good even on 3G. YouTube has been hit or miss on 3G but always good in wifi.
It is the router, Stever on this forum made a test on it. You Can search for the thread. His explanation is very informative. Seems you have to buy a new router that is compatible with the iPad's wifi.
Fate is not by CHANCE but by CHOICE.
This is a "Feature".
The iPad auto changes quality depending on connection speeds.
If the video being played isn't able to lower quality for bad connections it will switch to audio only until you get better service.