It is the general assumption that in estimation and control over wireless links, the receiver should drop any erroneous packets. While this approach is appropriate for non real-time data-network applications, it can result in instability and loss of performance in networked control systems. In this technical note we consider estimation of a multiple-input multiple-output dynamical system over a mobile fading communication channel using a Kalman filter. We show that the communication protocols suitable for other already-existing applications like data networks may not be entirely applicable for estimation and control of a rapidly changing dynamical system. We then develop new design paradigms in terms of handling noisy packets for such delay-sensitive applications. We reformulate the estimation problem to include the impact of stochastic communication noise in the erroneous packets. We prove that, in the absence of a permanent cross-layer information path, packet drop should be designed to balance information loss and communication noise in order to optimize the performance.