So I've tested the .capx that I was privately sent by — So far it's been running ~35 minutes with no issues. I'm testing an iPad Air 2 with latest iOS 10.3, WKWebView enabled and built via PhoneGap Build with latest Cordova.
The only place I can find an error message close to what has been reported is in cordova-plugin-httpd, which has an error message string matching "server is already up". This is slightly different to the OP, can you confirm the actual error message matches?
If so, it's pretty mysterious - that error can only appear when starting the HTTP server, and it is definitely started once only when the game starts. It's also not at all involved in audio playback. The HTTP server exists only to serve video playback in WKWebView. Audio playback is still routed through cordova-plugin-file even in WKWebView mode, which AFAIK reads files directly from storage without using any kind of server. There's also no reason the HTTP server for video playback would ever be re-started.
My best theory is the app is actually trying to restart and it tries to restart the server when it's already running. Perhaps some of you are trying to use the Browser 'reload' action instead of changing layouts to restart? Or maybe some kind of page-level navigation? Alternatively maybe another app on the device is trying to run a server or something like that? I'm really at a loss as to how this could be happening.
One thing you can try if this still affects you: before building the exported cordova files, open config.xml and delete the line that says:
<plugin name="cordova-plugin-httpd" />
This simply removes the HTTP server from the app. It will break video playback, but the runtime should be able to handle the server not being available as long as you don't try to play video. If that fixes it, it proves the HTTP server is causing the problem, but I would still be mystified as to why.