Hi all. I've been lurking here for a month or so and two royally sucktastic club rides have prompted me to get an account so hopefully you ladies can help me out.

I've just gotten up the nerves/been coersed by my wonderful and well meaning bike shop to join a club group that rides every sunday. I'm having a blast except...

They drop me like I'm standing still on even mild to moderate hills and I'm getting frustrated (even though they are awesome about it and 1 or 2 people drop back with me, etc).

I feel like it's my lungs rather than my legs (though the legs could use work too). I start up even a slight incline and I'm huffing and puffing and getting blown by in the process. If I drop gears and spin such that my lungs are ok then they drop me anyway since I loose so much speed.

Some pertinent info:
-I'm 23 and have been biking 4-5 years.
-This is my first foray into road biking for something other than my commute
-I tend to "hammer" rather than "spin"; I'm trying to work on that with the road bike
-I consider myself in decent shape, at least until I get with a group of others and they prove otherwise!
-I just moved to CO from sea level in August so altitude may have something to do with it, but to be honest I had this problem before as well
-I'm riding a 08 Giant OCR3 that fits well (Wilier Izoard coming after taxes, but for now the Giant has to do)
-To the best of my knowledge I'm healthy (but I'm beginning to wonder...)
- Previous riding style has been long rides, but at my pace which never stressed my lungs much.
-I ride once a week (this group ride) sometimes twice, try to commute at least once a week (it's winter and snowing), and take Karate twice a week. I'd like to increase riding time, but it's going to be a couple months (winter, daylight savings time, etc.) before that happens realistically.

What are some good ways to improve my lung/heart endurance/health?? On the bike and off. Ideas for off the bike activities that can help me build up a better base during the week would be awesome given the riding situation for the near future. (I have access to a full gym, free, but the stationary bikes are likely out of the question due to volume of use. I'm not opposed to running in the cold either if it's the best way to see results.)

Thanks!