I haven't encountered any freezing issue with my WDTV Live - and I use it daily. Maybe it has to do with specific file types? The content I watch is mostly Xvid/MP3 AVIs, with an occasional H264/AAC movie.

There's a chance it could still be a network issue - if you have other Ethernet cables at hand, try swapping them, just in case. Also, if you haven't tried it yet try unplugging the WDTV for a few secs and plugging it back in. It's essentially a Linux-running computer, so maybe one of the background services crashed, affecting the WDTV Live performance.

I assume you are running either the latest WDTV Live firmware, or B-Radd's excellent custom firmware (that's what I use personally)?