The lag problems are going to be on your end most of the time. High lag can come from bad areas or old computers, and not slow internet. If your connection is dropping out then you might have lag, but if you have a constant connection of 8kbps you should be fine.
So, what this means is that either you are downloading many small files out of a queue while you are playing and distrupting your network(highly unlikely), or your PC is unable to handle Planeshift. Do not worry yet. Try running Planeshift in safe mode. Safe mode says that it is slower, but on some computers it is faster because it doesn\'t try to use the stuff that your computer is lacking. If you still have problems and your CPU is at least 1ghz then you need more ram. If it is less than 1ghz than you will probably need to update your video card, and then possibly buy more ram. If you upgrade your video card you should run the game in OpenGL mode(not safe mode) to see if you need more ram.
It may be cheaper to buy a new PC if yours is less than 800mhz and doesn\'t have a 3D accelerator.