1. Download the latest Java 7 builds from here: http://download.java.net/jdk7/. Minecraft should run much smoother with less lag spikes. It really helps.
2. Set the Java process to higher priority
3. Set "Limit framerate" to Max FPS. The limiter is so implemented that it always decreases the FPS.
4. Update LWJGL from here. 5. Lauch Minecraft with less memory (yes, really). It needs maximum 256 MB and runs fine on all settings with the default texture pack. By default java allocates too much memory (1GB?) which may get swapped to disk and the overall performance may suffer a lot. To start Minecraft with less memory: