What do I do? video breaking up on some folks browsers.

When you say "breaking up", what exactly do you mean? Is the image degrading, or do you mean that the video is starting and stopping. In the case of the later, you can use a buffering strategy to minimize the problem, although users with insufficient bandwidth to receive the stream will still experience periods where the video pauses to buffer... nothing you can do about that short of having alternate, lower quality video for those users (you would do some bandwidth detection before playing the video, and serve the appropriate quality based on the results)

Flash Media Server (the current name for what was once called Flash Communcation Server) can be installed on the same machine as your HTTPD server... you'd just need to add an IP address so you don't have port conflicts (ideally, FMS will have access to ports 80, 443, and 1935).

As for the decision to go with a dedicated FMS or use a CDN, it really comes down to your business model and how much traffic you need to support. If you're talking about fewer than 1000 or so concurrent users (which one server could handle, provided it has adequate bandwidth available), and you don't have concerns about localizing delivery, it might make sense to host your own FMS. While the $4500 up-front cost for the FMS license is a big chunk of money, the long term breakdown often proves to make the dedicated server a good value.

If you're talking about thousands of concurrent users and/or ability to localize, it might make sense to use a thrid party provider.