Problem solved! And it wasn't anything to do with the router after all.
Did I mention I'm a mac user? Well I took a look at console and at the exact same time the music stops there's a LOT of activity from something called 'GoogleSoftwareUpdateDaemon'. Seems that if you have any Google software installed on a Mac (Chrome, Google Earth etc) then you also have this automatic updater that dials home and installs things behind the scenes. Seems that the amount of activity was causing network issues.
I've uninstalled everything Google-related and am happy to report that itunes, airplay etc is behaving nicely once again! If you don't want to uninstall there's another option here�
http://support.google.com/installer/bin/answer.py?hl...
Sorry for misleading you with my OP but I was damn sure it was the router, having had a similar problem in the past. Hope this helps someone.