Poor performance of Windows 7 (lags, spikes, delays)

Hi forums,
I have been using the official Windows 7 Professional 64bit for a week as everyone I know praises it as the true successor to xp. I, myself have been on XP 32bit (skipped Vista) and now I decided to pay to upgrade. Before we carry on here are my main specs:

Processor: AMD Phenom 9500 Quad Core
Ram: 4gb PC-6400
Graphics: 8800GT 256mb
Hard drive: 1tb Western Digital Sata
Sound: Razer Barracuda
Mouse: Razer Lachesis

Now on XP, I used to play Counter-strike Source and it would always be running smoothly and most things on the highest settings. Playing videos on youtube/vimeo ran very smoothly with no lag at all.

When upgraded to 7 64bit, I understand that drivers and all needed to be updated. So on with the drivers (in which all of them are verified for Windows 7 - this includes graphics, mouse and soundcard).
Now despite all i do, Source now only plays at roughtly 50-10 fps, average 25 to me due to spikes (was 90-70 fps) and commonly, there would be a pause at everything i do now and then (even when i type this, there are pauses of about 2 or 3 sec before the comp catches up with what im typing). When watchin vids (HD especially) it is the same. It is the kind of freeze that nothing happens then everything carries on as normal after 2 secs.

Now first instance, I thought it would be the graphics card drivers, so I downloaded the latest via the manufacturer, ASus, then off to the official Nvidia site, which provides the SAME thing. I know 8800GT isnt the fastest out there, but im sure as hell it can play Source at efficient levels. Im out of ideas. They say that W7 is the successor, so far id say it is, to Vista, but not XP...
(it might b just firefox for the videos bit, but source is just itself)

Any help is appreciated.

EDIT: Just updated Steam and it has got slightly smoother, though not as smoother as when XP was around.
Also, the lag for videos seem to happen when it is HD. Note that these issues do not exist in XP.

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same thing happens to me i went from 32 bit vista to W7 my CSS FPS and choke are terrible i might go back not to vist but to xp for awhile it very frustrating

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