1) Lag is mostly a thing of the past now, but depends a lot on the hardware. My Nexus 4 rarely lags, whereas my Nexus 7 (2012) lags all the time. Some poorly made apps can also cause lag (Facebook used to be pretty bad).

2) It works fine with Exchange, but is lacking in features. It has, however, received a major overhaul in KitKat, so perhaps it's better now (haven't tried it yet).