What editing software are you using? Different programs have different settings.
DV is a specific type of standard-definition compression format, usually recorded on MiniDV tape. DSLRs do NOT use DV.
HDV is a specific type of high-definition format, usually recorded on MiniDV tape. DSLRs do NOT use HDV.
DSLRs typically use a compression format called H.264 (AVCHD). It is a heavily-compressed format, usually used for high-definition video (this is NOT necessarily the same as the HDV format - I know, it's confusing). Different programs have different "best practices" for how to work with H.264, which chokes the processors of most computers if edited natively.
So, which program is it? Setting your project to HDV might work, but if there are even more options, one of the others might be even better. In Avid Media Composer, I'd probably work in something like a DNxHD 145 project. Final Cut Pro, I'd probably work in ProRes422. For other programs, there are other settings.
EDIT: So, let's see...you're cutting H.264 HD footage. Premiere Pro - what version? CS4? CS5? CS5.5? To be honest, I'm not very familiar with Premiere, I work mostly in Avid and some Final Cut Pro, but the concepts are similar, so I'll try to help.
Also, what other sequence presets are available? You might see "AVCHD" and "DVCProHD" as well. These might be better choices than HDV. Your source video is AVCHD. In a HDV sequence, your computer is not only trying to play back AVCHD, which is hard enough as it is, but also trying to convert it to HDV while it does so. This is an extreme strain on the processor, and choppy playback would be expected behavior.
Can you tell me some specs about your original footage? Is it 720p? 1080i? 1080p? And what about the frame rate - 24? 25? 29.97? This will help in selecting the proper sequence settings.
In any case, there are a few ways of attacking this:
1) Transcode your footage before editing, to a less compressed codec. One possibility is DVCProHD. It'll take a while to make the conversion, but should go much more smoothly during the editing process itself. You'd bring your files into Adobe Media Encoder, then encode everything to something like "P2 Movie." You'd then change the settings for the encode, depending on what your source video format is. You'd use the 60Hz settings for NTSC-format countries (video recorded at 24p, 30p, or 60i), and the 50Hz settings for PAL-format countries in which video is recorded at 25 fps. This is similar to what I sometimes do for Avid - I convert everything to DNxHD before I start (or ProRes for Final Cut Pro). From there, editing just flies! If you're still unsure of which video parameters to set, feel free to ask.
2) Edit your video natively. I THINK that if you choose one of the AVCHD sequence presets, your raw video will not need to render in order to play back. If you add effects, those effects will render to a less compressed codec for smooth playback. If your computer is up to the task, this might be worth a try. It will definitely be better than choosing HDV!
Overall, a good rule of thumb for video is to convert and compress as FEW times as possible. Whenever you can work with the original files smoothly, that's preferred. When that's not possible, convert to a good intermediate format. That's why Avid has DNxHD, and FCP has ProRes. They're intermediate formats with no visible quality loss, but much smoother editing performance.
Again, much of this depends on which version of Premiere Pro you have, as HD features have been added and tweaked rapidly in recent releases. Which version is it? I'm somewhat familiar with CS4 and CS5.