As i type this I'm watching 720p streaming VEVO videos on my atv1 running crystalbuntu Gotham installed on the internal HD over wifi with the stock wifi card and no crystal video card.
it works like this: it all depends on the video and audio settings for your system/tv and what video file you are trying to watch. it depends on how hard the software has to "work" to display your video file. when you have the crystal card installed all video becomes hardware decoded. 1080p doesn't work too good, 720p works good as long as you don't tax the system too much. the "rawer" you can get the audio and video to display the better, meaning avoid having to downsample from 1080p to 720p and from 5.1 audio to 2 channel audio. if you get files that are 720p with 2 channel audio it works almost without dropping frames ever, youtube music videos look absolutly amazing. if you're trying to watch an ultra high bitrate 1080p video with 5.1 (or 7.1) audio it aint going to work if you have to downsample it.
the built in wifi itself works fine for me, disconects once in a while when i leave it on all day. unfortunately these days its almost not worth upgrading an atv1 with a crystal card and a wifi card because those two items alone cost as much as some android boxes and the atv1 will NEVER run netflix or hulu. if you already have a spare wifi usb adaptor and an atv1 lying around then go ahead and buy a crystal card, but otherwise just sell the atv1 and get an ouya.
if you want to install xbmc on the ATV1 make sure you do a hardware install, the usb install is just too laggy even with a class 10 card.