Which version of Premiere Pro are you running? CS5, 5.0.2, or 5.0.3? What kind of video card is installed? If you are on a Mac with an ATI card and running Premiere Pro 5.0.2, or 5.0.3, reinstall Premiere Pro CS5 and leave it at v. 5.0. Do not update it.
Another possibility is a corrupt sequence. Can you copy/paste your clips from your master sequence to a new one with the same settings. Try that.
You should also know that your system really needs upgrading, or you'll continue to have problems like this. USB 2.0 is much, much too slow for the files you wish to play back. Upgrade to an external FW800 drive and your situation will improve. Also bump up the RAM to max out your iMac (8 or 16 GB) for a better editing experience.
In comparing Premiere Pro CS5 and CS3 versions, CS5 will need more resources because of its nature as a 64 bit application. You'll definitely need a lot more RAM for the system to operate as you would expect it.
I'm gonna try the reinstall, I'll get back to you on that. I've already tried the copying and pasting into a new sequence, which is what I thought was weird. I'm banking on the uninstall, but I know I need to update. But just because I have a short film to edit doesn't mean I have the money...
Thanks for the feedback. I appreciate something in a direction I can explore - aside from starting from scratch. Like I said, I'll gladly follow up, especially if one of those options solved the issue.