Overheating causing(?) spinning wheel

The last couple of days I've been debugging why my year-old iMac has been suffering increasingly long bouts (sometimes over a minute) of spinning wheel. I've sort of solved it but was curious since I hadn't read about spinning wheel as a symptom.

* it's definitely heat related as fan control software mitigates it. Ambient air is ~26°C
* in extreme cases the spinning wheel seems to prevent the machine doing anything. After forcing a reboot I've seen the machine not even find the startup disk (flashing "?" folder!)
* ...then booting off install disks the hardware appears as just "Media" - no partition map, nothing
* ...mercifully it came back after a cooling off
* I first used smcFanControl which I see (cautiously) recommended quite a lot here. My experience has been that I prefer "iMac Fan Control" http://www.derman.com/iMac-Fan-Control which is a prefpane and takes over the heat->fan speed controls. It requires a bit of fiddling to find the right slope & intercept but seems to work well. I found with smcFanControl I had to create a bunch of presets and constantly switch between them.
* even when the machine was pretty hammered Exposé almost always still worked (is that an independent GPU function?)

Some questions:

* I still don't know why the wheel is spinning. The Developer tool, "Spin Control" was never catching anything
* These symptoms seem to crush the machine at relatively low temperatures, like >60°C (PSU 1 is 70°C). This has only started happening recently.
* The spinning wheel sometimes even happens when the temperature is <60°C. It seems associated with heavy disk activity (e.g. Time Machine backups) but I'm not 100% sure.

Any insight gratefully accepted, thanks!