Nice example. It seems
knit2pdf(stitch("knitr performance.r", output = NULL))
because stitch() will compile the tex output to PDF automatically. Besides, I do not recommend spaces in paths or filenames; sometimes they bring troubles when we call external programs like LaTeX.
you are welcome to play with the LaTeX part of knitr which should be mature enough now; once the markdown support becomes mature, I believe all R users should be able to play with dynamic report generation easily because no knowledge of LaTeX is required then -- it can be even simpler than Word.