Apparently, Valve is aware there is an issue with Source games and lag. For this reason, they are currently running a BETA that all Source server administrators can participate in.
We have a beta update for the Source Engine available for DedicatedThe more server admins that participate in this, the quicker the bugs will be found (and hopefully fixed). Hop to it!
servers. To get the update run the hldsupdatetool with "-beta srcds0407"
on the command line.
This update addresses some lag issues that have been seen when running
the Source Engine (in particular, it programmatically does something
similar to using the net_queuesplits cvar).
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