Intel Mac :: 24 Screen Is Going Bonkers Then System Freezes

I have been having a problem that is not application-specific, and not Lion specific. This only happens on my 2009 iMac 24 running Lion 10.7.4. (I also run Lion on my 2011 MBP and have not had this problem.) It doesn't matter whether I'm in iTunes, Safari, Logic, Pages... running applications alone or in combination.It doesn't happen right away. It's usually after I've been active on the computer for at least an hour. I will try to describe it the best way I can: 

1. I could be browsing Safari, for instance. I'll notice that a small section of my desktop starts "growing" red, green, and/or blue pixels. If left untouched, the pixels overtake about 70% of the display until the computer freezes. Now, if i click anywhere on my screen -- in Safari or on the desktop -- whatever the mouse is pointing at will redraw itself. Meanwhile, the screen starts blinking rapidly and basically, has a tantrumI can't Force Quit, Restart, Shut Down, or any other activity. The only solution is to power it down using the power switch. 

2. I'm working on music in Logic Pro. When I have Logic running, it usually spans the entire display. Within the Logic screen I'll see a small section of these red, green, and/or blue pixels. (Well by now, I know what's coming so I immediately save my work before the system freezes.) I quit out of Logic, but the pixels continue to take over my desktop. If left on it's own it starts going berserk as described above. Eventually the system freezes and I have to power down

This started happening last month. Two things happend last month: (a) I switched my internet service and combined my internet connection with my land line. I had previously been using a dedicated line for internet. (b) My service agreement expired on the iMac... go figure! 

Info:iMac (24-inch Early 2009), Mac OS X (10.7.4)