Newbie looking for best way to start

I've bought a new Sony HD camcorder which saves the files in a m2ts format. I've been able to import this file into kdenlive and rendered a new file (I didn't do any cutting yet). The rendered file looks very impressive on a HD screen and I don't see any difference with the quality of the original file. So far so good.

My goal is to make some family home movies but in a good quality so I can view it on a big screen. The file will be streamed to a PS3 and displayed on a HD projector. So no youtube or website quality.

However, I'm unable to play the file smoothly in kdenlive. I'm using an Asus UL30A on opensuse 11.2 (CPU 1.3-GHz Intel Core 2 Duo ULV SU7300).

Should I get a better computer?
and/or
Should I first convert the m2ts file into another format? Which format would you recommend without any loss in quality?

I don't have any experience with the different file formats, so any help is much appreciated.

Regards

Ivan