I read somewhere that -i shouldn't be set above 11, so I edited my config and now I have the following config.
cudaminer.exe -i 11 -C 2 -l 32x4 -m 1
I my card is working fine now. System is responsive and I'm getting above 140 khash/sec. My driver version is 314.22 and card is GTX 560 Ti.
Any suggestions?
Read the included README. -i is not intensity like with cgminer, it is 'interactive mode' on or off. Set to 1 if you want your computer to be usable (interactive) or 0 to load the GPU 100%.