Increasing the maximum packet size (up to some value < 2^16 bytes) can be a good idea if you’re planning to stream only over a LAN. If, however, you’re planning to stream beyond a single LAN, then you should be aware that some routers (and/or firewalls) may limit the size of network packets that they can forward. In that case your (larger) packets might not get forwarded at all.
As you noted, increasing the packet size reduces the number of network packet sends that get done, and thus improves performance (though probably mostly due to to reduced OS overhead, not reduced overhead in the LIVE555 code). Ross Finlayson Live Networks, Inc. http://www.live555.com/
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