For a while I thought my internet connection was having issues while playing black ops. However, my friend came over with his 360 and we were playing CoD. On my screen, I see people jumping around as if I was lagging, but on his everyone is moving smoothly (and we are on the same internet connection!).
I connected my xbox to the TV (non HD) he was using with his cables, and he connected his xbox to my setup (AV receiver/HD TV). He was able to see everyone move smoothly and play fine, whereas people were jumping around a bit while I played with his cables on a less demanding TV.
So...if the lag issue is not my internet, and not cables or other components. What could it be? Is my xbox overheating? I do not notice this issue on other games, but I do play many online games as demanding as CoD on the xbox.