Thicker, knobby tires will definitely slow you down. You may also want to look at positioning too. Adding some bar end grips on each side of the handlebar will stretch you out a tad and get you in to a bit more aggressive position that will help you get a good stretch when you pedal.Paging Beags.
Talk to me a little bit about road tires on a MTB. I'm sort of hating the lack of efficiency I get on the hills around here and have thought about buying some of these in 26 x 1-1/8. Or, if there is something better I'd be open to it. Don't plan on offroading and don't want to pay for a road bike.
To give you an idea why, I can basically push myself as hard as possible, but still am right around 4:56/mile and 12mph average speed.
Putting some slicker tires on there will definitely help you with building a bit of speed, and is something that is quite common that people do. I know a good bit of people that have two sets of wheels, one for when they take it off road and one for when they are riding around the streets or cruising with their kids.
Dont get hosed in to paying $50 per tire either, there are plenty of solid options in the $20-$25 price range.