When it comes to using SSH on Prompt, which is a super awesome piece of software, there is lag for me as well. Now, I SSH into servers all the time because of my job and on my computer, there isn't any lag either, but at the same time, there is lag on my new iPad (3rd Generation).
The lag that you are experiencing is completely normal when it comes to the way SSH works on tablet like devices. The internet connection and the software you are using on a MAC, PC, Linux machine is usually tightly integrated into the system of the machine. Such as with terminal on the Mac, this software is ridiculously refined and made in such a way to be super fast because of its super tight integration.
Prompt and other pieces of iOS software that use SSH are not true terminals like the ones that you have on your MAC, PC, Linux machine. They are pretty much emulations of SSH terminals. All iOS software is sandboxed into its own little area. This sandboxing is good because it provides security but it is back because it doesn't allow certain apps to be as tightly integrated with the system in the same way as a terminal application on your computer. Because of this there is always going to be a bit of lag from when the when you press a key, it has to be sent across the wire to the server, the server has to accept that the key was pressed and then respond to the terminal with a update to what is on screen. Not only that, but the software has to reinterpret through emulation everything it is getting back in the stream from the server, which continues to add to the delay that you are experiencing.
It is the same as using VNC or Remote Desktop, no matter how good of a connection you have or how close you are to the machine you are connected to, there is a still a noticeable delay when refreshing. More so than what you would experience on a much more powerful than an iPad desktop/laptop computer.
In short, there are multiple reasons for the delay, iOS sandboxing, emulation of an SSH environment, hardware specs, software integration. But at the same time, it doesn't mean that the software is useless, Prompt is great and I use it all the time on my new iPad.
You can also read more about what happens during SSH here:
So, don't worry about your keyboard, there isn't anything wrong with it. I hope that this helps answer your question.