if you're getting internet at all on your PS, then an incorrect hookup isn't the issue. In all honesty it could be the servers. You have to remember the amount of data being sent and received between your console, other user's console and PS' servers. There will be lag.
I have the first gen PS3 and I use WiFi only. I haven't experienced dramatic lag or Mbps of 1. So that's kind of alarming. Maybe try a different time of day, just to rule out the possibility of server congestion.