I had the following issues with Demigod under Vista Ultimate 32bit:

Stuttering Sound - Even with sound quality set to low, the sound would crackle and stutter constantly, even in the menus. Sometimes the sound would get "forgotten" for a while and then all come in at once after a few minutes of silence. I am using a Creative Sound Blaster Audigy 4 with the newest drivers and software from Creative connected via analog cables to a 5.1 speaker system. I had the game assigned in ALchemy and tried various buffer settings with no solid improvements.

Low FPS after a few minutes of playing - Seemed to be related to the sound issue because /nosound improved this quite a bit but was not an option for gameplay reasons. In each round things would start off at about 30 fps, then over the next 10 minutes or so drop down to under 10 fps, even on small maps.

One thing I noticed was that whenever I started this game (not any others) Vista's audiodg.exe process would consume between 30-50% of my CPU and would continue to do so even after the game was shut down. I would have to restart the PC because shutting down audiodg.exe will disable all sound (thanks microsoft!!!). After doing a bit of research I found that some people had better luck disabling "Enhancements" in the audio settings but this did nothing for me. I have known for a while that Creative's drivers and software doesn't play nice with others, but this was a game-breaker in this case.

Eventually I decided there was no workaround for me under Vista while still using my Soundblaster so I downloaded the Windows 7 RC1 and installed it.

With the W7 packaged sound drivers, I still get all my enhanced audio effects and surround sound. However, I don't get the high CPU usage when I play sound through the game. I now am getting a steady 50 fps throughout the round and the sound is rock solid and perfect! If you are having sound issues, especially when using a Creative sound card, try giving the free Windows 7 beta a shot. Aside from fixing these problems it seems like a pretty big improvement over Vista in many other ways.

TL;DR I installed Windows 7 and it fixed my sound problems, tripled my fps, and washed my car while I slept!