When doing a 3Mbps video stream from a Windows guest running Windows Media Center to a XBox 360, there is packet loss reported by ifconfig and no configuration stops it. Windows Media Center uses UDP as a transport and according to upstream, there is nothing in place to do proper flow control inside the kernel. See "with UDP this likely leads to overruns and packet drops" http://www.linux-kvm.org/page/Networking_Performance I observed this on an AMD Phenom X6 T1090 when the CPU is below 10% utilization, which is something we should be able to handle without dropping packets. We should modify the kernel to implement proper flow control so this does not happen.
I'm curious to know what kernel you are using. I've recently had a co-worker doing some work in areas related to this in the kernel and QEMU and after talking with him, I don't see where this would be happening with very new QEMU (1.2) and a very new kernel (3.5).
