The new damage system wasn't properly implemented and leads to several infinite loop bugs which cause massive slowdowns (not related to ping). The most common cause is someone buying the Grudge Bow. It gets worse when someone buys the Grudge Bow and uses an AoE spell - depending on how the damage loop is written, you'll either deal nigh infinite damage (e.g. Mokou, Reimu, Sanae, etc) or no damage at all (Marisa, Byakuren, etc). In fact, anyone who is able to reduce magres can cause such spikes, but the Grudge Bow is by far the worst offender.
The bug has been identified though and probably the reason why the next version is taking such a long time to be released is because rectifying it involves re-writing lots of triggers.
To see the bug:
http://www.mediafire.com/?fjpzk1cgpt6qcx6(Note: Doable with only lvl 1 in the spell. Now imagine 10 of these things going on at once :V)