Lion will run on 2GB of RAM but it is advisable to have at least 4GB, and more depending on the precise model you have. Crucial.com will advise you one to one or via a tool on their website. Try to use matching pairs of RAM, say 2 x 2GB.
The problems you outline are those usually encountered with the bare minimum of RAM.
Incidentally, imacs can accept up to 6GB of RAM and the latest versions even more.
I have the same computer that you do and I very stabley run 6 GB of RAM in it. At the time that model of iMac was released Apple had only certified it to run with up to 4 GB of RAM, but the online company OWC later proved that 6 Gb runs perfectly stabley in it, and they have since sold a LOT of 4 GB modules to go along with one of the existing 2 GB modules. The difference in system speed by upgrading from 2 GB to 6GB is enormous. I highly recommend it to you.
By the way, I and many others on this Forum also recommend the prices and excellent sales service of OWC for RAM sales (and no I don't work for them):
Hope this helps