This may sound a little odd, but every time I fold the monitor closed on my laptop, everything on my system slows down or stops. It's not an auto-shutdown system or anything. It's just that when I am starting up and the screen is closed, everything seems to take three times as long - the same goes for when I am shutting down. If I am listening to music, I cannot close the screen as the sound gets choppy and stops suddenly. I'm using a Dell Inspiron 2650 Laptop with Gentoo Linux 2.6.8-r3, but the problem has been there ever since the beginning (some time around 2.4). Any suggestions?

My guess would be that the computer is using ACPI and a speed step processor. It's detecting that power save mode should be started when the monitor is closed. The processor and bus speed is probably dropping to conserve battery power, and so applications requiring more processor power are choking. Try disabling ACPI in the kernel.