Lag issues.

So, today I got my VGA HD cable and GTA 4 Episodes. :D

I then continued to play it, all worked fine.

Then later I played some more, but I started getting lag spikes pretty often and it made game pretty annoying and unplayable.

Radio sound is still going on when I'm having lag spike, but everything else is frozen. Lag spike lasts around 2-4 seconds and appears pretty often. :(

I'm using PC monitor on reso 1680x1050 with Xbox 360 Elite. Pretty sure it isn't overheating, because air coming out of Xbox is cold and Xox itself is slightly warm.

I'm pretty much newbie on Xbox so I don't really know what to do. Should I clear my cache or use lower resolution?

Thanks.