Low FPS, very slow gameplay, low memory

Minecraft Crash Report ----
// I'm sorry, Dave.

Time: 7/9/13 2:00 PM
Description: Updating screen events

java.lang.OutOfMemoryError: unable to create new native thread
at java.lang.Thread.start0(Native Method)
at java.lang.Thread.start(Unknown Source)
at avk.A_(SourceFile:90)
at awb.a(SourceFile:94)
at ats.a(SourceFile:550)
at blq.a(SourceFile:259)
at awb.a(SourceFile:69)
at blq.a(SourceFile:503)
at awb.d(SourceFile:128)
at awb.m(SourceFile:107)
at ats.k(SourceFile:1158)
at ats.S(SourceFile:663)
at ats.d(SourceFile:619)
at net.minecraft.client.main.Main.main(SourceFile:101)

A detailed walkthrough of the error, its code path and all known details is as follows:
---------------------------------------------------------------------------------------

– Head –
Stacktrace:
at java.lang.Thread.start0(Native Method)
at java.lang.Thread.start(Unknown Source)
at avk.A_(SourceFile:90)
at awb.a(SourceFile:94)
at ats.a(SourceFile:550)
at blq.a(SourceFile:259)
at awb.a(SourceFile:69)
at blq.a(SourceFile:503)
at awb.d(SourceFile:128)
at awb.m(SourceFile:107)

– Affected screen –
Details:
Screen name: avk
Stacktrace:
at ats.k(SourceFile:1158)
at ats.S(SourceFile:663)
at ats.d(SourceFile:619)
at net.minecraft.client.main.Main.main(SourceFile:101)

– System Details –
Details:
Minecraft Version: 1.6.2
Operating System: Windows 8 (x86) version 6.2
Java Version: 1.7.0_25, Oracle Corporation
Java VM Version: Java HotSpot(TM) Client VM (mixed mode), Oracle Corporation
Memory: 108995744 bytes (103 MB) / 160669696 bytes (153 MB) up to 1037959168 bytes (989 MB)
JVM Flags: 1 total; -Xmx1G
AABB Pool Size: 0 (0 bytes; 0 MB) allocated, 0 (0 bytes; 0 MB) used
Suspicious classes: No suspicious classes found.
IntCache: cache: 0, tcache: 0, allocated: 3, tallocated: 63
Launched Version: 1.6.2
LWJGL: 2.9.0
OpenGL: Intel(R) HD Graphics 4000 GL version 4.0.0 - Build 9.17.10.2849, Intel
Is Modded: Probably not. Jar signature remains and client brand is untouched.
Type: Client (map_client.txt)
Resource Pack: 16-FixPack.zip
Current Language: English (US)
Profiler Position: N/A (disabled)
Vec3 Pool Size: ~_ERROR~ NullPointerException: null