I decided to replace the hard drive as precautionary measure. I upgraded from the stock 1TB to a 120GB Intel 520 SSD with a clean install and so far everything has been fine.
And the performance gains with SSD are amazing.
From what I understand - the Intel SSD garbage collector is pretty good thus isn't worth hacking around with kexts to get TRIM support. I'm tempted to upgrading my hard disk to an SSD once I have some spare cash.
Thanks - really good advice above. I did try steps 2 and 3, and yes I did have a few Kernel panics in 10.7.3 (but narrowed it down to an older version of LittleSnitch).
IMHO I'd do a clean install and avoid anything that really mucks around with the kernel unless you really, really, really need to have a driver installed for a piece of hardware - Sierra Wireless drivers seem to be pretty stable from my experience since I used to own a 326U not too long ago. Although Apple does promise to provide a stable API for low level developers there are some times issues that arise due to bugs in the software or problems in the API being fixed but the kexts expecting the API to behave in a certain way.
One of the things I do like about the likes of EyeTV and Windows Phone Connector is their use of userspace kexts which mean if they crash the whole system isn't pulled down - hopefully little snitch developer in future will move to a design that ensures if his software goes haywire it can recover gracefully without the whole system being pulled down with it.