I think that AVG may be having something to do with your slow speeds. I had it on my old pc running xp then after one of their updates the machine was very slow and a quick google suggested that AVG was to blame.. I removed it and installed microsofts own security essentials, which is free and the machine ran fine after that.
I would not go for buying a large drive. If it fails you lose all your data. Two 500 G drives are a better idea than 1 1TB drive.
Scarey figures from Google who use huge numbers of off the shelf drives in their data centres. 1.6% of drives fail in the first year. This figure rises to 8% after 3 years.
I would not rely on DVDs for long term storage I have some that are unreadable after 3 years.