Sims 3 is surprisingly quite a high demanding game, and one of those reasons is simply because the optimization of the game is quite poor, even on high end systems if you try and rotate the camera quickly you will lag even though FRAPS still reports you are getting 90FPS. Really to play Sims 3 you do need a "real" graphics card, by that I mean an Nvidia or ATI, Intel GMA are really not up to the job of running even the most basic games, most will barely run Vista Aero. With the laptop of the OP the 2 bottlenecks are his 1.6Ghz CPU and his crappy Intel 965 Chipset, since there is so much going on in the Sims your CPU is running at 60/70% most of the time and 1.6Ghz even though it's a dual-core it really will struggle.
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