We are running SUSE 11 SP4 as VM on the top of XEN and we have seen a weird behavior where the network latency increase and the network throughput increase as the CPU increase in the VM, by example with CPU utilization on the VM of 2-5%, the latency is under 0.2 ms and with throughput of 1400Mbps, but as soon as the CPU start increasing the latency increase and the throughput reduce, by example at 50% CPU utilization can easily reach 4 ms and the throughput reduce to 400Mbps, which seems to be to much of an impact at a reasonable CPU utilization, of course this can get worst if the CPU increase.

We have checked and there is not signs of network bottleneck on the physical server which host the VM (with a connections of 5Gbps) or the other end (another physical server with 10Gbps)

Have you ever seen this type of problem,