Ethernet problem?

Hi all,
I have an iMac with iTunes. I have an Airport Express connected to my HI-FI.
I have a router/modem. (BTs latest - in the UK).
I stream my music from iMac to HI-FI. I use my iTouch with the Remote application to control the music.
iMac is connected via ethernet to router BUT using Homeplugs. (they use the house wiring to complete the ethernet connection.)
Airport Express is wireless.
All has worked fine for over 2 years.
The router is new, so when I installed it, I changed from using WEP to WPA.
Recently, the music streaming has started to drop out.
I changed the iMac connection from ethernet (Homeplugs) to wireless, and all seems fine again.
By the powers of deduction, would you reckon I have a hardware issue with the Homeplugs?
Has anyone any experience of anything similar?

Also, could someone tell me how the wireless connection reaches the Airport Express?
Does it go via the router, or is it direct between the iMac and the AE?

Sorry for the long post but any advice appreciated.

Neil

Homeplugs should be fine for music streaming. I only had to upgrade when I wanted to stream video - there is a specific powerline that has more bandwidth and large packet support so it shouldn't be that. Also I have WPA2 running and no dropouts for music so it shouldn't be the security either.

It could be that there is enough interference where you live that you may be having trouble. You could try istumbler to see what is around you and if it is on the same channel, etc.
http://www.istumbler.net/

You can also see what is connected to what via the airport utility. On the summary page of any of your devices you will see Wireless clients -> click the words and you can see what is connected to the device and information like signal, noise and rate. Do note you will have to figure out what device is what via the MAC address - which you can find under system preferences network -> advanced - It will be the AirportID