iMac 7,1 getting really sick

Hi,

I've had an iMac 7,1 since around 2008 (running Lion) and sadly it seems to be getting rather sick lately.

For starters it is just generally really slow. I use two accounts with fast user switching on this Mac and it seems to get bogged down really easily.

The internet is also really problematic. It's on a Wi-Fi connection but it frequently can't load pages in any browser and it is only fixed by turning the Wi-Fi off and then back on again.

Also in one account it tells me the disk is locked when I try to use iTunes and Time Machine no longer works, the computer comes up with an error screen every few minutes saying that the Time Machine backup has failed.

I have disabled resume and when I log out I untick 'Reopen windows when logging back in but every time I log in Chrome, iTunes, Pages, Preview, iCal, Word, System Preferences, SketchUp, Transmission, Awaken and Terminal all open. If I change my wallpaper the old one will be back next time I log in.

Up until now the computer has been really quite reliable. Could it be some kind of problem with a particular component? Eg. hard drive failure?
I have no idea what might be wrong with it.

If anyone can help me out and if you have any suggestions about what do please let me know Should I wipe and reinstall Lion?

Thanks,

Tim.