I could be the system reading from the harddrive, it can cause this kind of lag. But as you have a descent amount of memory, it shouldn't lag that much (at least it doesn't for me). Maybe it has something to do with insufficent memory on the graphics board, or something like that, so that it has to fetch data over the AGP a lot. I dunno..
I you haven't, enable frame limiter. It got all choppy on me, when I disabled it, even on my system.
AMD Athlon XP2500+ (Barton) @ 2GHz/FSB200. ASUS A7N8X Deluxe v2.0.
2x256MB Kingston Hyper-X PC3000 @ 200MHz CL2 7-3-3. Hercules Radeon 9700 @ 338/318.