How larg is your LP? The largest i did was ~1600x1600 and i did not encounter any lag problems...but i'm running a quad core and 4gb ram anyway so dunno really...
2GB should be enough!??...maybe cancel all other running programs while smudging or scan you system for viruses...they can really slow down your pc.
Stop running other programs. The bigger your brush gets the laggier it gets when smudging, it's not a matter of canvas size.