I would recommend trying a different kernel first. As always, make a nandroid backup first, and then try a lower speed kernel to see if the stability improves. Just out of curiosity, did you wipe the cache when you flashed to 1.1.1?
Yes, I always do a full data and cache wipe when switching builds. I've had good luck with ChevyNo1's kernels, but I don't think they support Compcache? Jdlfg's kernels were decent, but I ran into wifi problems with those. On previous builds, without compache, I run into horrible screen redraw lag. Has this been addressed between 1.0 and 1.1.1?