Didn't you hear - there's no lag in DDO anymore - they "fixed" it (*cough cough*).
Get CCleaner and clean up your system's temp files and registry (always backup your registry).
Get Smart Defrag (or whatever you are using) and keep your hard drive defragged regularly.
Get Spybot (or AdAware, or whatever) and get rid of your spyware. Also make sure to run a virus scan every so often and keep both up to date.
Set your page file higher. I have 2 GB of memory, so I set my page file at 4 GB (4096 MB for both the initial and maximum size, which is the highest you can set it).
I set my DDO graphics on medium, which is not bad at all. In fact, many hardcore gamers set their graphics settings lower for better game response.
Turn off all unneeded background programs and processes (you can use CTRL-ALT-DEL to pull up windows task manager - look under the applications and processes tabs). You can also disable some of your startup programs that might be bogging your system down (and if you have installed a bunch of stuff on your computer, this can equate to a LOT of startup programs).
Uninstall all the programs (use common sense here) that you have never/seldom used (Control panel > Add or remove programs). When you are done uninstalling, reboot and be sure to use CCleaner to cleanup whatever is leftover (and then reboot again and defrag your system).
For those folks that want to try to tweak your broadband connection, I recommend TCP Optimizer. I have the cheapest (i.e. slowest) broadband plan and after installing this program, it made a huge difference - your mileage may vary. Be sure to read the documentation.
And definitely what Anto said - anytime you switch toons (i.e. not quitting, but logging out to the character page and choosing another toon), it progressively chews up a little more and more of your computer's memory. Eventually your client will crash to desktop or you will be lagging so much that you will have to restart/reboot. This is an example of sloppy programming and (for me) it is unavoidable. Logging out entirely (i.e. quit game) helps to reset it and rebooting your computer is even better. There is a discussion about this on the DDO forums here.
Hope this helps!
P.S. I use a 5-year old computer with a slow internet connection and it works just fine using the methods listed above.
And yes, there was a little "Turbine lag" on the servers yesterday - others (including me) were feeling the burn too.