I have a similar problem with playing flac files. I also stream the music over Wifi and use a Edimax EW-7811Un.
The weird thing is that if I connect the Wifi adapter via a powered usb hub, the dropouts disappear.
And with raspyfi1.0 beta I didn't have any dropouts neither...

So maybe try a powered usb hub?

The command below shows some useful stats. Note the high number of RX dropped packets, more than 50% !! At first I thought this could be the cause of the audio dropouts but a 50% dropped packet rate would do much more than cause periodic dropouts, so I figured that it must be bug in the driver stats counter.

In fact a new Realtek 8192CU driver, version v4.0.2_9000.20130911 includes among other fixes, a fix for the RX stats bug. Note: the version in the the RaspyFi 1.0 image is slightly older v3.4.4_4749.20121105.

I'm still not making much headway on the what is causing the audio dropouts for 24/96 files over WiFi. The bit rate for these files is only 4.5 Mbps which should be no sweat for the Pi, and in fact playback is perfect when using ETH instead of USB WIFI.

So maybe this is USB bus bottleneck when using USB WIFI and USB DAC ??

pi@rp1:/$ sudo ifconfig wlan0
wlan0 Link encap:Ethernet HWaddr 80:1f:02:a2:b9:d7
inet addr:192.168.1.52 Bcast:192.168.1.255 Mask:255.255.255.0
inet6 addr: fe80::821f:2ff:fea2:b9d7/64 Scope:Link
UP BROADCAST RUNNING MULTICAST MTU:1500 Metric:1
RX packets:65226 errors:0 dropped:67498 overruns:0 frame:0
TX packets:4086 errors:0 dropped:1 overruns:0 carrier:0
collisions:0 txqueuelen:1000
RX bytes:38309918 (36.5 MiB) TX bytes:765225 (747.2 KiB)

I'm investigating whether WiFI bandwidth/speed may be causing the 24/96 dropouts, Below is output from a couple of network commands that show a snapshot of the stats for the WiFi Access Point and the USB WiFi Adapter on the Pi while playing a 24/96 track.

I'm not seeing anything that would indicate WiFI issues, The bit rates, signal quality, signal level, noise level and retries all seem to be golden. If there is another tool I can use I will try, but for now the data suggests that the dropouts are not because of issues related to WiFI RF.

Since the dropouts occur at more or less regular intervals, and there is no loss of music, i.e., there is a brief a pause then the music picks up where it left off, I am thinking that a buffer underrun is occurring somewhere in the system. I increased the MPD buffers using the WebGUI but that only delays the onset of the dropouts.

Possibly there are WiFi adapter settings that could be tested for example, TX/Rx buffer size, etc. I will look into this.

WIFI STATS:

ACCESS POINT - ASUS RT-N66U w/Merlin .26b firmware

pi@rp1:~$ sudo iwlist wlan0 scan
wlan0 Scan completed :
Cell 01 - Address: 60:A4:4C:29:FA:D0
ESSID:"AirnetN2"
Protocol:IEEE 802.11bgn
Mode:Master
Frequency:2.412 GHz (Channel 1)
Encryption key:on
Bit Rates:144 Mb/s
Extra:rsn_ie=30140100000fac040100000fac040100000fac020c00
IE: IEEE 802.11i/WPA2 Version 1
Group Cipher : CCMP
Pairwise Ciphers (1) : CCMP
Authentication Suites (1) : PSK
Quality=100/100 Signal level=100/100

USB WIFI ADAPTER - Edimax EW-7811UnR2 150 Mbps

pi@rp1:~$ sudo iwconfig wlan0
wlan0 IEEE 802.11bgn ESSID:"AirnetN2" Nickname:""
Mode:Managed Frequency:2.412 GHz Access Point: 60:A4:4C:29:FA:D0
Bit Rate:150 Mb/s Sensitivity:0/0
Retry:off RTS thr:off Fragment thr:off
Encryption key:****-****-****-****-****-****-****-**** Security mode:open
Power Management:off
Link Quality=100/100 Signal level=88/100 Noise level=0/100
Rx invalid nwid:0 Rx invalid crypt:0 Rx invalid frag:0
Tx excessive retries:0 Invalid misc:0 Missed beacon:0

I tested WebGUI playback of 24/96 ALAC files using WiFi then ETH. Files are on a Server. Note,16/44 files are no problem on WiFi. Results below,
- WiFi: 24/96 regular dropouts occur every second or so
- ETH: 24/96 no dropouts

Here is my config:

1. Raspberry Pi Model B rev 2 (512 MB)
2. Edimax 150 Mbps Wireless 11n Nano Size USB Adapter (EW-7811UnR2)
3. HP North American Power Charger FB341AA#ABA for HP 9.7'' 16GB,32GB TouchPad
4. SanDisk Extreme 8 GB SDHC Class 10 UHS-1 Flash Memory Card 80MB/s (SDSDXS-008G-AFFP)

Any insights into this issues would be greatly appreciated.