If VLC is popping this up, your computer is running to slow. period. It only pops up this message after the CPU is pegged and you start dropping off video frames.
2.33 should be fast enough, provided you have 4gb of ram. You might also need to quit all other open programs, especially background apps like adium, or utilities that run up in the menubar, or dock widgets.
In general 2.33 should be fast enough...