How to reduce lag on my Minecraft server?

I have Windows 7 Ultimate 64 bit, 6GB of 1333Mhz RAM, an Intel Celeron B820 CPU, Intel HD Graphics 4000 and a 320GB HDD. Every time I play on my Minecraft server, it lags. I have allocated 1GB of RAM to the server. It is a server that I play on with two friends. I play with Smooth Lighting set to "Off", my Render Distance is at 2 chunks, Clouds are set to "Off" and I've set the "javaw.exe" system process's priority to "High". What else can I do to reduce the lag?

Guest

Well you need a bit more ram allocated to your server and you Really need a graphics card as its also probably your computer too, not just the server thats slow.

Guest