I've been using shi-painter for years and that's not crap. It's even my favourite. But yeah, it sounds like a computer problem. If you don't fix it you just have to use small drawing programs (like shi-painter, chibipaint and Blush) which don't use so much memory etc and just learn to draw with not so complicated programs. I think the best artists can draw without all the special tools etc.
Sounds like a RAM problem to me, hence why you're lagging on all applications. Try turning off backround programs as well. You should check your physical memory, Ram and cpu usage to find out for sure.
Possibly. A lot of people have issues with lagging; my memory and processor aren't super fast or big or whatever and I've heard thats what you need in order to have Ps run smoothly. My main problem is finding a new program that will work for me though. Surely a lot of people must have this issue with the processor speed, so there must be a program out there for the low income, crappy-computer digital artist... right?