I am running a PVE 2.0 on a decent Hardware (2 SATA HDDs as RAID1, 12GB RAM, i7 CPU) but the I/O Performance is very poor inside the VM (Ubuntu 11.10 Server). The very same VM was copied to another Server running simply Ubuntu Server with KVM and had better I/O Perf.

this is how the HDD is shown in the Guest:

ata1: SATA link up 6.0 Gbps (SStatus 133 SControl 300)
ata1.00: ATA-8: ST3000DM001-9YN166, CC49, max UDMA/133
ata1.00: 5860533168 sectors, multi 16: LBA48 NCQ (depth 31/32), AA
ata1.00: configured for UDMA/133
scsi 0:0:0:0: Direct-Access     ATA      ST3000DM001-9YN1 CC49 PQ: 0 ANSI: 5
sd 0:0:0:0: [sda] 5860533168 512-byte logical blocks: (3.00 TB/2.72 TiB)
sd 0:0:0:0: [sda] 4096-byte physical blocks
sd 0:0:0:0: [sda] Write Protect is off
sd 0:0:0:0: [sda] Mode Sense: 00 3a 00 00
sd 0:0:0:0: [sda] Write cache: enabled, read cache: enabled, doesn't support DPO or FUA

I tested with DD:

$ dd bs=1M count=128 if=/dev/zero of=test conv=fdatasync
128+0 records in
128+0 records out
134217728 bytes (134 MB) copied, 19.2222 s, 7.0 MB/s

on the Host, this same Test will result with 156 MB/s in average.

PS: I am using VirtIO and see no error in dmesg.