I see little to no lag and any battery drain is minimal, IMHO. I use the rotating earth one and what's fun about that wallpaper is you can change it to pretty much any existing planet or those in moviedom...like either death star or Pandora.
A good test to see the lag, you should download something from the market and while its downloading open some apps and keep going back to the homescreen. I get a lot of lag when I do that. It doesn't happen all the time but I have seen it a few times. The live wallpaper will slow down and the phone will become unresponsive.
I use Earth Rotation for a couple weeks now. Love it. The real time day night and image refresh is amazing. I loved watching hurricane Alex's progress every time I looked at my phone. No real lag and as far as I'm concerned you're not really enjoying your phone without live wallpaper.
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