I've dealt with using keyloggers and removing keyloggers.
Since my desktop is a quad-core computer with 2GB of RAM, it shouldn't have lag issues. ;x
I've used it to monitor a spouse if I suspect something's going on that I really should know about. (And sadly, often enough, I'm proven correct...)
As a sysadmin, it's necessary at some point if you suspect other employees are twiddling around.
Though I'm planning on setting up a router that will monitor EVERYTHING incoming and outgoing. Any chats, IRC, Yahoo, MSN, AIM, etc, gets logged in the router.
This router's a custom one, and probably won't have all of that nice, glitzy shit that current routers have.
Personally... I don't like doing it. But I will if I get the sense that something's off.