I have this same problems on 2.4 on an iPod Touch 2nd gen, iOS 4.2.1.
After killing the Genie, it seems like the game really lags and I get what rdermyer describes as "walking but displayed in the wrong spot".
I also have the constant crashing issue. Most often the crashes occur after leaving a level. Perhaps 1/3 or 1/2 of level loads seem to crash. It seems to be more frequent when loading the level after finishing the Genie level. I often have to fight him 3 times because each time the game crashes I must replay the level. If I quit the game, it remains saved at that spot, so I can quit after killing the Genie and then if it crashes it restores to that saved spot.
The other crash I experience is one that I have seen mentioned elsewhere and that is with the Quadbone. It seemed to work fine in lower levels, but it crashed a lot in Hell – my guess being that it was crashing when trying to generate a Shadow Friend. Perhaps it is trying to load the Knight resource and if that enemy does not appear in Hell it cannot find it?
The game is a lot of fun, but the constant crashing is certainly a frustration.