I switched to jplayer and I am still having the same issues
This seems to be a bug in chrome with streaming mp3 playback via html5 audio. It doesn't occur on firefox and if i fallback to flash it disappears, for now i've enbabled a "legacy option" and added the following line
error: function(e) {if(e.jPlayer.error.type=="e_url") {if(e.jPlayer.status!==undefined) {$("#player").jPlayer("play", e.jPlayer.status.currentTime)} else {next_track()}};}
This causes the song to stop for about a quarter of a second then resume in the exact spot it errored, obviously not ideal, but it's better than it was