With the Spring 2006 Dashboard Update, the online stuttering no longer exists and this work around is no longer necessary.
Many people have experienced very bad performance when attempting to play Ridge Racer on Xbox Live. The cause of this problem has been found and attributed to being connected to a networked computer. To resolve this problem, go to the Dashboard, then go to the System Tab, click on Computers then select each connected computer and disconnect them by pressing B.
This fixes the stuttering problem making the game playable online, however you do lose the ability to stream custom soundtracks from you computer.
