This may be of help for some others who have had similar problems.
I managed to figure it out myself in the end. Docky seemed to be the problem, as the system slowed I checked in system monitor and it was running at very high cpu rates 100%
Aparently it is not uncommon for Docky to run so high http://wiki.go-docky.com/index.php?title=Debug
Anyway I uninstalled Docky and purged it's dependencies in terminal - sudo apt-get purge remove docky
Since then CPU usage has gone down considerably and the system is idling at around 470 mib of ram.