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It is possible that the second firmware update fixed or helped the Netflix issue
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I may not have solved a Netflix issue so quickly
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I finally bought a new router (Belkin Dual Band 802.11n) to replace my old 802.11g router and that solved both the X-Box Live issues and the Netflix issue
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I contacted Sony about this issue and was routed offshore to a help desk employee who said it was a Netflix issue.
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Between the NetFlix issues and the menu issues you literally have to keep the remote within hands reach so that you can cycle the player on/off to restore the internet connection a couple of times per