Texture packs that wont lag?

[DRedshot]

But if it is such a problem, you could use GIMP to half the resolutions of some of the larger / more common textures, it wouldn't be too dificult! Just a bit time consuming.

The textures are in DDS format because it is a popular format that supports mipmaps. Mipmaps help improve performance when looking at long distances by picking one of the smaller images within the DDS file. For this reason i claimed that the textures are not the issue.

Yeah, you're right, but if he did half the size of the DDS, each mipmap wold be half the size it originally was, and the largest size (when standing near a wall) would be a lower resolution. I know it's a very impractiical and not a very benificial solution, I was just answering his question directly like he asked.

I agree 100% that the textures are not the problem, and that he should try altering the advanced settings.
Maybe try a lower resolution like GrayFox said? Maybe 800x600 will solve your problem?