People who lag do not cause lag for other players on a server. In order for that to happen, it would mean that the server pinged each individual player in turn, waiting for each individual response before pinging the next player. That, of course, would be really crappy netcode. In reality, with the netcode in almost all games, the server pings and communicates with players constantly and in any order, and does not wait for individual responses before attempting to communicate with the next. The netcode is multi-threaded, meaning that the server handles all the client communications simultaneously. Therefore, one lagging player does not lag the whole server.
So how did so many people get this mistaken belief?
Well... first, older netcode (in old Q1 for example) was not quite so versatile.
Second, lagging players in many games can be hard to track because of their tendency to "warp."
Third, not all lag is caused by a server's bandwidth problems. In fact, a lot of lag occurs when a server has too many players on it and its CPU and/or memory is overloaded. People cry out, "Kick the laggers!" and then do, and whadayaknow, the lag is gone! But not because they happened to kick the people with high pings, but because the server is no longer overloaded.
/edit: some have brought up issues with games that have "lag compensators" for people with high pings, for example Q3 engine-based games like MOHAA (I haven't played the multiplayer on this one) or Q3UT (urban terror, I play this one a lot). This "lag" has been purposefully placed into the netcode in order to level out the playing field between LPB's and HPW's. Personally, I hate this, but then I go by the old skool belief that having a faster computer is just part of the game and that some people should get off their cans and upgrade.