There's basically two issues going on and it seems to affect different phones.
The issue on GitHub that is fixed by the new kernel/driver is different than the one the OP is talking about.
That issue seems to mostly affect MAC addresses that don't start with 00. The issue with that is that WiFi won't reconnect to an access point after waking the device up.
The issue the OP is talking about is more of a power saving issue. Regardless of the sleep policy, Wifi slows down or stops. It can slow down enough to make streaming music impossible.
The best way to test this is to turn off your cell connection (airplane mode, take out your SIM, etc), then use only WiFi. This way, you're 100% on WiFi without the possibility of it falling back to your cell data connection.
I have a 00 MAC on an At&t N1 and I have this issue.
As someone else said, mine seems to throttle the connection way down and it'll start messing up my streaming radio. I was mostly testing it with the SiriusXM app since I don't think it does as much buffering as Last.FM.
With no SIM in the phone and connected to a Linksys G router, my music would start getting choppy or completely cut out after about 10 minutes or so.
If I ping my phone's IP, it'll make the connection alive again and bring it back to normal speeds. If my XM stream stopped, I can usually ping the IP and it'll start back up again immediately.
If you setup a never-ending ping from your computer, then it should keep the WiFi on the phone from going into its deep power saving mode. I will test this theory today. The downside is that you may not always have a computer to be able to do this.
While the connection may slow down enough to effect streaming radio, it usually never affected my notifications and push mail since that requires small data packets.
So for those of you that say you don't have this issue, please try it in airplane mode or take out your SIM. Then listen to streaming radio (preferrably something that doesn't buffer much) for 10-20 minutes.
Last.FM buffers whole songs, so it might take longer to notice it in that app.
Actually to be precise. The two problems are like this:
For phones with MAC address starting with non-zero. The issue is wifi policy doesn't work at all no matter how you set it. The wifi will idle/stop when the phone goes to sleep and may not be able to reconnect to wifi when you wake the phone up.
This above problem is most likely fixed by the new driver fix by Broadcom.
On the other hand, the other problem is like you said, power saving mode. And this problem affects almost every phone out there even with the MAC address starts with 00. But what's different here from the first issue is, here the wifi connection is weakened and degraded when the phone goes to sleep because the wifi chip is supposed to save power. That's why you get the choppy sound gradually and stream finally stops. But in the first case, the streaming would usually stop shortly afterwards and there's no response when you ping the phone. I've read that some people have this problem, they can receive email notifications and such during sleep but won't have VOIP ring.
That being said, the power saving mode issue is yet to be fixed. But I think it can be kind of solved through apps like Wifi Fixer because it will keep "waking up", "refreshing" the phone intermittently when the phone's asleep. I think that's the reason why some people reporting wifi fixer works for them, yet some others say no maybe because their MAC address starts with non-zero, which is actually the first problem, thus can't be solved with a work-around.
Also this second problem doesn't seem to affect people that badly because there are also people reporting being able to stream radio for over 30 minutes.
Can you try streaming with other online radio app? Because maybe other apps may keep refreshing data connection, so won't disconnect. Also another way to try this out is logging in an instant messenger app(nimbuzz, ebuddy, etc.), put the phone to sleep on wifi and then send messages to your phone, see if you can receive the messages or not. Email notification is another way to test it out too, although it could be slower and not as responsive.