I don't think the lag issue comes from the GodSpire server, I think it's client-side or GameSpy lag.
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Client side, meaning some have it, some not. Some players frequently leave an 'empty body' behind. I don't think it is gamespy, you directly connect to the server, gamspy just makes the server lists and stuff.
About lag on GodSpire, the speed of a line isn't the same as the delay on the line. If something between the server and client is overloaded for example, you can have huge lag on the server. While the rest of the net doesn't. Distance is also a factor of course.
Also, like Mo says, it helps to spread over a few areas. It reduce the traffic, lowers the visual load on the clients.
-Mel