It's just how the physics engine works. When you are bunched together with someone there are a lot of collisions that the game has to calculate, and if you have a slower computer there may not be a way to fix it.
Try frame skipping, not using shaders if you are, and perhaps a smaller window resolution will help.
Hi. I used to be a damn good mod (wayback 2008 and earlier) and then veb made me not a mod.
Been playing competitive Team Fortress 2.
This happened to me on my other computer, every time me and uke touched eachother/hit eachother, it did a MAJOR lag, so i'm guessing you're computer isn't that good =/ and there might be no way to fix it.
Try typing /re 640 480
It'll look a bit worse, but probably work a bit better...
If it helps, and you want it to always be like that, add the following line to the profile.tbs file in your toribash directory:
re 640 480