To quote the BBC technical department may explain things:-
Nintendo Wii supports only Flash 7, which uses the Sorenson Spark codec rather than the ON2 VP6 codec introduced with Flash 8. Unfortunately, the Sorenson compression isn't nearly as good as ON2 VP6 compression, which is why most video sites gave up encoding their content in Flash 7 compatible format.
However, there are a lot of Wii boxes out there hooked up to TV sets, so with a little extra encoding effort (specifically, transcoding an additional 400 hours per week in an extra format) we can make BBC iPlayer programming available on Flash 7-enabled devices, including Wii.
Our regular Flash content is encoded at 500Kbps. We chose that bitrate because it's the highest quality that could be reliably streamed on pretty much any UK broadband internet connection. However, for Wii we had to increase the bitrate to 820Kbps because the Sorenson codec used by Wii simply needs more bits to achieve the same picture quality. So, for a smooth playback experience on Wii you'll need an internet connection that can give you 1Mbps or better. If you're experiencing buffering issues, try turning off those p2p downloads that are running on other computers around your home.
The Flash player that ships with Wii was designed to support YouTube-style quality levels rather than the much higher video quality that we try to provide in iPlayer. Unfortunately, that means on Wii, at least at this time, our programmes won't look as crisp as on Mac, PC or iPhone. iPlayer on Wii is still in beta, and over the coming weeks we'll tweak the video encoding rates and playback window size to get the best possible video quality.