A 26 x 1.25 will work if your rim is a 17c or 19c (rim width, bead hook to bead hook). By our our specs, these are the only two rim widths that will safely seat both a 1.25 and a 1.95. Other widths may seem to work, but you could be pushing your luck. If this is not marked somewhere on the rim (it should be), take a caliper and measure the inside width of the rim. If it's a 21mm or wider rim, you may run the risk of blowing a narrower tire off the rim.
As for whether it's faster or slower is really dependent on several factors. A wider tire actually rolls better, however at a certain point wind resistance becomes a much more significant factor than rolling resistance. As you increase speed, wind resistance increases fairly dramatically (See Chart).
As for a tire that one might suggest, there are so many options in so many price ranges, with features that may or may not be important to you, it's difficult to just throw out some suggestions.
Is speed more important? Puncture Protection? Does weight matter? How much are you looking to spend? All of these factors represent some positives and some trade-offs depending on what is most important to you.
We have a Kojak and a Durano in this size, both are what I would call "slicks". The Durano has a minimal tread pattern that I'd call mostly cosmetic. Unless you do significant off-road riding, a tread pattern is meaningless
(From Sheldon Brown)
Tread for on-road use
Bicycle tires for on-road use have no need of any sort of tread features; in fact, the best road tires are perfectly smooth, with no tread at all! If Puncture Protection is very important, we have the Marathon Plus; our most bombproof tire.
Unfortunately, most people assume that a smooth tire will be slippery, so this type of tire is difficult to sell to unsophisticated cyclists. Most tire makers cater to this by putting a very fine pattern on their tires, mainly for cosmetic and marketing reasons. If you examine a section of asphalt or concrete, you'll see that the texture of the road itself is much "knobbier" than the tread features of a good quality road tire. Since the tire is flexible, even a slick tire deforms as it comes into contact with the pavement, acquiring the shape of the pavement texture, only while incontact with the road.
People ask, "But don't slick tires get slippery on wet roads, or worse yet, wet metal features such as expansion joints, paint stripes, or railroad tracks?" The answer is, yes, they do. So do tires with tread. All tires are slippery in these conditions. Tread features make no improvement in this.
I will say that all premium tire manufacturers will have some tire that will suit your needs. I can only ask that you give ours a look.