I don't play games, so I don't know about lag time.
I know that 120Hz makes everything look like "LIVE camera", instead of that "motion picture".
My Sony TVs are set to 120Hz. I've never messed with the settings. I don't ever watch the Sony TVs because I only watch on my JVC PJ. But every time I see something on the Sony TV at 120Hz, it's looks really funny because everything looks like I'm watching from a live hand-held camcorder.