1.7.4 Minecraft Server 'Can't Keep Up' ERROR?

CPU Specs: Quad Core 3.4GHz, running on 8GB of ram, 1GB Graphic Card

Keep in mind I use to run 1.5.2 and 1.6 servers, Pixelmon along at times, without no issues, no errors, straight up flawless and lag less. All my servers are Vanilla.

Ever since I reformatted my PC, meaning no more MineCraft files anywhere in the system, I created a 1.7.4 server so the kids can join in and play together; I'd say there's 6 of us, max. Server has been lagging for a while, started crashing at times, I can see my allocated memories were running out and so I allocated 2GB of memory and that fixed the crashing issue; but the server STILL lag at time to time. Memory is at the 90%+ FREE, so I'm positive the lag can't be caused by insufficient memo… I've looked everywhere online and can't seem to find a fix for it, tried this and that, done that and this. I use to run my servers fine until I created an updated MC Server, 1.7.4. Is this a common issue/glitch that 1.7.4 is having or am I having just having issues on my side?

FYI: I'm NOT running any plugins or MODS, the server is just strictly plain and simple, how it came with at the moment.

Have plenty of Memory, High 90%+ FREE of memory to use. Not running anything at the background. Java Process barely running ~20% or 30% max of CPU… What can be the problem?

Its based on your internet speed

No i have same speed computer running solo on and still happens