I've narrowed down the issue to the mob farm that is situated near the witch farm. When I remove the repeater that links the timer on the mob farm to the dispensers etc. then I no longer get the issue. When however the repeater is in, then as I go around the witch farm (which is 128 or so blocks away) then I tend to get the problems.
On my server, with the same water pushing mob trap it is NOT caused by the redstone. If I remove the water buckets from the dispensers but leave the redstone connected and functioning I don't get the lag.
edit: I tried replacing the water buckets with arrows. No lag. I tried with lava. No lag (mind you, lava doesn't spread as far as water).
I tried changing the packed ice platforms for iron blocks (with water dispensed). Still lag.
So yes, it has something to with the water, not the redstone clocks.