I also experienced this after an OTA upgrade to PR1.2. Initially everything worked great; the browser seemed blazing fast and the phone was very responsive - but after a while everything started lagging horribly. The screen would not unlock (or it took almost a full minute); sometimes I'd get a call, but would be unable to answer since the phone was frozen; the desktop shortcuts wouldn't open at all, etc. All of this was accompanied by abysmal battery life (two-three hours, basically doing nothing), and pretty intense heating.

So, I figured that there must be something running in the background - probably something that I had previously installed from the extras-devel repository. Sure enough, after uninstalling a few apps that I suspected to be doing something on their own or otherwise seemed a bit unnecessary (and some that I quite liked), it seems like the device is now running smoother than ever. Although I have to admit that re-flashing might be the sensible thing to do in any case.