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I'm getting constant freezing when playing MKV files, is this normal for these type of files or should it be playing seamlessly? Do I need to make sure there are no apps running in the background like outlook or anything that requires internet connection? the network is wireless by the way. The TV I am streaming to is a sony bravia KDL-40NX713 and I'm on SKY BB if that helps.

With such a big file I assume it's high res. I'd expect stuttering on a wireless network.

So what should I be looking at for an MKV file to play smoothly, 2-3gigs ?

Sony NX7xx is probably limited to 20Mbps for video bitrate, you can check the average/peak video bitrate of your mkv with this tool : viewtopic.php?f=17&t=2133

The length doesn't matter, it's the bitrate that does. In your case, if it's a standard ~2hrs movie the bitrate is very high (bits/second) which the wireless network is not good for. TO play this kind of files you'll probably need wired network.

OK, I have just check the bitrates on one of my MKV file using 'bitrate viewer'. The file which is constantly choppy when streaming wireless as well as wired has an average bitrate of 152.11 and at it's peak it is 52560, I also checked an xvid file which is currently playing flawlessly as I type this, and this has an average bitrate of 1880 and a peak of 10782. How is it that there are guys on here that are able to play MKV files fine, is it because their files are not 1080p?
Is there a way I can reduce the bitrate without losing to much quality so I can get these files to stream wirelessly or should I just save the file to a USB stick and plug it in my Sumvision Cyclone Micro 2+ ?

If there is anyone about who streams MKV files can you post what your average bitrate and if you try to stay away from 1080p mkv files due to poor playback.

Thank in advance.

I would avoid 1080p rips, honestly, i have tried. Anything that gets around 15,000kbps / 20,000kbps will stutter.
You can get lucky and find a decent quality 720p rip at around 3/4.5 gig that may not stutter, depends how the peaks run. I always look to see if the peaks are below, say, 15,000kbps before i will decide to watch or not, it depends how harsh they are an how often.
A native 1280x720 resolution rip will stretch to your screen and will look great.

edit:

PS, The size of the file doesn't matter, since a lengthy movie can be somewhat bigger. I say, a 2 hour movie at 4.5/5gb will most likely not stutter, depends on action scenes, etc, etc.
For a 1 1/2 hour movie, 3/3.5gb should suffice, but if you can't stand the stutter, like me, run all movies you wish to DLNA through bitviewer first.