So, after about 6 months of bewilderment I finally figured something out - my antivirus was making iTunes slow down my computer. I use NOD32 as my antivirus.
When using iTunes, my computer would lock up for about 3 seconds everytime a song switched. Browsing the library was slow, too. Closing iTunes locked my computer for about 10 seconds while a dialog saying "saving itunes database" displayed. It was ridiculous, but I still used iTunes.
Anyway, after thinking about why the slowness would happen after songs changed, it dawned on me that it probably had something to do with writing information to the ipod database or actually accessing the different files.
All I had to do to drastically speed up iTunes was set up my antivirus program to exclude all of the the iTunes folders.
After fixing this I'm literally shocked at how fast iTunes is. It's awesome. I have no idea why iTunes was affected so much - I've never noticed any slowdown with any other programs. I'm just happy its finally taken care of, so I thought I'd post something on here in case someone else was having my problem and they never thought that their antivirus could be the culprit.
You're not the first user that had problems with iTunes and NOD32.
Is there a way to exclude iTunes from scanning? Specifically, I believe the issue is that iTunes updates the library file (iTunes Library.itl, and probably iTunes Music Library.xml) and NOD32's scanning is slowing this down.