Oracle - ORA -01652 clarification

1) I am a Java developer and not having much expertise on Oracle Database. We have deployed our EJB aplication in two Websphere App Servers with Oracle 8.x databse (I will call as APPSERVER 1 and APPSERVER 2).
I get the following error in APPSERVER 1 when I searched for a large chunk of data.
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ORA-01652: unable to extend temp segment by 64 in tablespace TEMP
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I did not get this error in APPSERVER 2
By modifying the table space in Oracle Database in APPSERVER 1 to overcome the error ORA-01652
The issue is, APPSERVER 1 is pretty slow in response time compared APPSERVER2. My question is will the poor respose time (perfromance) be related this table space setting in the APPSERVER 1 database.
2) IS it true that Oracle Database Isolation "READ_COMMITED" will be faster than the Oracle Database Isolation "SERIALIZABLE"?