The game works by building a "snapshot" of the game world every 1000/snaps milliseconds. It then interpolates between the last 2 snapshots to make it look smooth. The snap setting controls how often the client tries to process a new snapshot, the more regular the updates the smoother and more precise the game will seem - however the server will be running at a set sv_fps value which is how often it will update the world (producing a new snapshot) so settings snaps clientside above the server's sv_fps value will mean you just re-process the old snapshot - however due to complexities in the code having this above the server update rate clientside can actually make the game slightly smoother.
No (additional) problems with the shadows on my GTX470 SLI setup it stutters just the same with or without them.
