Raja,
As you have now experienced, yes... In general, event monitors should only be run on a production systems as a last resort. An exception can be made for the deadlock monitor on V8. There are other exceptions, but they are on a case by case basis.
This is one selling point that Oracle people love to bring up. The event monitor is one of the weak points of DB2 in my opinion. I've had it slow my dev and QA systems to a crawl during tests. You have to be very careful what you monitor, how much you monitor, and when.
Unless you really need all SQL, a snapshot is usually enough for a decent picture of what is going on.
-- Steve
DB2 UDB DBA