I am noticing some hesitation and lag.

My Xterra always had a little hesitation (you pop the throttle, and the truck takes a split second to say "What?" before responding).

The power is strong, it just seems like it takes a fraction longer now for the engine to respond to input from my foot.

Any thoughts on what this might be?

Engine is stock, but with a K&N filter.

FWIW, my wife's '07 seems much more responsive from throttle input than my '06.