Same thing happened to mine Wed morning (VZW, Pre 2, 2.0.1). My Favorites list would constantly contract, then expand, contract, expand, over and over again (my accounts are MS Exchange, comcast, yahoo). Closing the email app didn't solve the issue. Rebooting the phone didn't help either.
One of two things took care of it finally. I noticed that somehow one of the Outboxes was now listed under Favorites. I removed that. I usually have the three Inboxes listed. And my yahoo account wouldn't complete a refresh of new messages, so I removed and re-added the account. After doing one or both of these the email app was back to normal. I've had to on occasion remove and re-add the yahoo and/or comcast account to resync the account with the phone in the 5 or 6 weeks since I've had it.
Very weird. And the constant expanding and contracting made it impossible to select a folder. And as you found, other apps were acting strangely as well in that they were quite sluggish. And the behavior was beating the heck outta my battery.
You are not alone. :-)