There was a recent update to the Dropbox app, that specifically mentioned improvements in video streaming (on the n7, IIRC too).
I did the update, but haven't tried it out sufficiently to comment on whether it's done the job.
I did ascertain that even with the update it wouldn't play some videos that also wouldn't play before the update.........despite all the files being encoded the same way. That's a mystery to me.
Skydrive reportedly streams movies with no issues BTW, though I don't currently use that platform.