How much lag is too much? The all important ping time for proper gaming and a wireless connection is considered sacrilegious for a true gamer causing all sorts of drops and additional lag. Or does it?

My connection (highlighted) shows that I'm only getting a 35% signal strength and I'm surrounded by active wireless APs. What is the trick?
The answer lays in the channel 153 and band I'm using. In a typical wireless home 2.4GHz has long been the radio of choice. Newer laptops, phones and yes even XBOX consoles now natively support both the 2.4GHz and the preferred 5GHz radio. Think of the difference as AM radio versus FM radio (kids ask your parents). AM is like the 2.4GHz of yesterday that goes a greater distance. But FM radio is preferred even with a shorter distance for much the same reason as 5GHz is preferred today. It is typically not distance that is a problem but quality. Using the 5GHz channel space means far more non-interferring with your neighbors channels. The 2.4GHz only has 3 channels that are non-overlapping with each other where as in the 5GHz you can find up to 23 non-overlapping channels. Being on your own channel space means avoiding collisions with your neighbors devices, which means less resending of packets, which means less lag.
With the additional of channel space comes the ability to use wider channels and jump your speeds from 54mb/s maximum to up to 150mb/s per antenna with spatial multiplexing and MIMO found in using 802.11N the current standard of choice. Which means the XBOX One with 2 antennas compared to the 360s single antenna gives double the throughput and additional signal.
Yes XBOX One supports a gigabit ethernet wired connection and all the benefits that come with it as far as security and lack of complexity. But give wireless a shot. Change your home access point to support auto channeling in the 5GHz. Microsoft recommends on their site a broadband internet connection of 1.5Mb/s. And while using the 5GHz channel space won't make our internet faster it will allow you to use it with nearly the same experience as a wired connection with all the benefits of going wireless.