I had fan problems too on my macbook (Black 2006) and in fact I installed Fan Control too. I thought I would never have to see that app again! haha.
Ok. First things first. It is pretty normal that Flash makes your fan spin like crazy. It happens on my machine too, since it is really processor intensive.
Secondly, as far as I know Macbooks have just 1 fan, unlike iMacs for example, so if thats the case of your machine (which most likeley is, but jsut to make sure research) than you must not worry for the -1.
And finally: nope. Fan speeds should not affect the performance of your machine. I know because when I had problems with mine my macbook would just overheat/make noise but work as usual. The fan even died, and my macbook kept running (though it's dangerous to run a computer without a fan). I didn't notice this happened and it finally overheated to about 90-100 degrees Celsius which caused it to shutdown automatically for safety. My point? I didn't even notice, because my mac never slowed down.
So I'm guessing your issues are due to something else.
Firevalut could be a reason, and a pretty big one if your disk is very cluttered. Even with Firevalut off, disk clutter can slow down your computer if its excessive, specially on startup.
RAM could be, specially if your running memory intensive apps. Your macbook should be able to get an upgrade. Your manual should have some more info on that, like up to what you can expand it (perhaps 4 or 8 GB).
What OS do you have? If your'e still running leopard I recomend Snow Leopard: it frees up Disk Space and has some other optimizations.
And last, your apps. Check if any apps are eating your CPU in the background using Activity Monitor (Applications/Utilities/Activity Monitor). Also, check on System Preferences for any apps loading when you loggin (Accounts > Login Items tab). Try to get rid of some background apps you might not need.
Hope it helps! Anything else you need just tell me.