During the daytime, there is no problem. At night in the village however, there is bad block and time lag (opening chests is not affected). It is only stopped by restarting the server, which is running with JVM flags -Xmx2G -Xms1G. It shouldn't be a ram issue (its running with twice the recommended amount) and the CPU usage on the computer is not maxed out. The server console keeps giving the "Can't keep up, did the system time change or is the server overloaded?" message. It has never done this before 1.6, in the past I had an even bigger village and set off a bunch of TNT and had more than 200 villagers. That ran with no problem at all.
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CubeTheThird
migrated
I was on OpenJDK 7, but it kept crashing both the client and the server randomly. I don't know what's worse, random crashes or weird lag.
CubeTheThird
Then you should try Oracle java. It can be a bit more difficult to install, but it has never failed me.
migrated
I'll bet you five bucks this is MC-17630
I can't be sure that this will help, but I highly recommend updating your java install to either Oracle or OpenJDK 7, as OpenJDK 6 has been known to cause problems with Minecraft.