What is the image size and frame rate of the MJPEG stream coming from your camera? If you set both of those too high (say 640x480 or greater with the best image quality at 30 fps) then you are going to be sending a very large amount of video data over your local network, and you are going to be requiring that the iCamSource on your computer receive and process all of those frames of video data.
I would suggest bringing the frame rate down to around 5 fps and possibly the image size down to 320x240, which is about the resolution of your iPhone.
I currently run 3 MJPEG WiFi cameras on their own 802.11g WiFi router (to keep my 802.11n free) on my network at 640x480 @ 2 fps. I kept the resolution high so that the raw saved Motion Event images would have the best resolution, and I dropped the fps down to 2 because the iCamSource only checks for and records motion once every half-second. I have all 3 iCamSources running on a 1.83 GHz Intel Core 2 Duo Mac mini 2,1 with 1 GB of RAM that was purchased in November 2008 without any CPU issues. (They each use less than 5% when running.)
I believe that dropping the frame rate down will help the most.