weird lag on physics blocks game

ok so im making this physics blocks game, i have an editor

i made something, i loaded it it worked fine

i made another one, not really bigger or anything ( same amount of blocks)

only when i run it it completely freaks out, and lags like nobodies business does this happen if objects with behavior are spawned overlapping or something? why does it do this?

nobody else has had this problem ever?

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dl.dropbox.com/u/70111979/canon%20broken.capx

it spawns about 30 blocks

with 27 blocks on a previous level it was no problem, but now all of a sudden its lag city.

my guess is objects are over lapping? and maybe its making the physics engine freak out?

oh my second guess is the blocks in the middle are stuck in some kind of endless loop because they are constantly bouncing off of the surrounding blocks?

again just another guess.

my second question is, are physics canon games in?

( where you have a canon and you destroy physics walls)

I was going to make this one be futuristic, and have ragdoll people in side of the buildings