Unless your doing a massive bird, paint isn't that large of an issue - unless you use some older oil based paints from the 70's. Don't laugh, I've a whole basement full of that old stuff, and since its been kept cool and dry, it has excellent value and covers very well. 8)
I agree with Zippy though, odds are your second flight had a motor that varied greatly from the first. Try a 3rd motor, and I'll bet you'll come closer to your first altitude than the 2nd flight.
On a final note, did you double-check the launch lugs to be sure paint didn't clog them up ?
As to paint helping heigth, I've used Dope on many rockets and the finished outer shell was very smooth. One other thing that can help is to smooth a bit of baby powder over the rocket after a week of drying. Why ?..it helps you " feel " bad areas that may need extra sanding. With my Sandhawk, I sanded and sanded till I thought to try baby powder, and sure enough it pointed out one small area near the cone that I'd missed.
I reached 4712 with the sandhawk pre-painted and lost only 39 feet on the second painted flight. Granted both launches came on very calm almost windless days, but thats a positive example that paint doesn't add too much weight.