I play WoW and it never lagged before but now it's lagging like crazy. View specs:
5 Years old
P4 3.2Ghz HT
512mb x 2 dual channel kingston ram
ATI x800pro 256mb
160gig x 2 Raid 0 HD
17 inch LCD monitor
Okay I'm assuming you're using a wireless connection. It could be a problem with a crappy wi-fi card. Before jumping to conclusions, download CCleaner and run it, and then run a windows disk defrag. A lot of times running CCleaner can make a difference if you haven't ran it in a while.
Agreed on the gaming over wireless. And using two wifi devices in the same area reduces the overall signal. The one that is least uncovered (probably the laptop, since it's mobile) will get the better signal.
No, I play WoW and he would not see graphics lag/FPS drops if he loses his internet connection or has a slow connection. The world would appear the same. Other players might lag and jump around the screen but when you lag out or disconnect in WoW the world still looks normal.
Im not sure what the problem could be though. Does it do it in other games? Try and delete your WTF and Interface folder, or rename them if you dont want to delete them. WoW will auto generate a new set of folders for you and that will run everything with default settings, that way if its a WoW config problem that will fix it.
Also, if you haven't already, post this in the WoW tech support forums over at forums.worldofwarcraft.com
They have an excellent support team and the help from other players can be just as usefull.