You internet connection wouldn't happen to be wireless would it? I'm not talking about your router, but your connection to the ISP.
I ran a wireless network from alpha->full launch, for an ISP, and one problem that plagued it was dropped packets.
Especially if they are in an unlicensed spectrum like 900, 2.4 or 5.8.

That being said, I've been noticing a lot of "loot-lag" that I haven't seen in a long time.