i my self think its the sound system it uses starting to think i should copy my minecraft and gut it of the current sound driver files and test newer one and better ones because the whole game uses java never know java to be a good audio player in games.
I've got it running on a Mac Mini, 2GB RAM and a 2.4GHz dual core. Running with the app, not in a browser.
The game takes up huge amounts of memory and literally cripples the CPU (this is according to the Activity Monitor). I was trying to get some building done in the Nether but I just saved and quit because I was losing a fight with a Ghast due to lagging. The game is freezing and all of a sudden blocks around me are on fire.
I'm sure Notch will get this figured out, but I just thought I'd throw my specs out there for comparison.
I run some other software that uses Java, such as Zend Studio, and whenever Zend Studio is open AND minecraft is open minecraft runs noticeably slower. So one thing to consider is whether or not minecraft is the only thing using Java. I think it has become more sensitive to this since the update, but I might be wrong.
Also I've heard that using one of those unstable Java updates can boost speed a lot.
This is not specific to the update, but the newest update is much more process intensive because of the biomes and more advanced terrain system, so it might be more sensitive to slow-downs.