If you have Vista, definitely put all the video settings to a minimum; otherwise it shouldn't be as bad but I'd try that anyway. Other than that, all I can suggest is to see what your latency and frames per second are, which you can do after patch 2.1 by just pointing to the green/yellow/red bar, (green is great, yellow is okay, red is not so good). What connection are you on? Dialup? Broadband; Wired or Wireless?
But I'm on dialup and I play with a constant red, sometimes yellow colored bar (500ms+ definitely) latency with barely any lag.
In capital cities on high population servers, you'll probably encounter lag no matter what your specs are.