Performance problem using V3 protocol in jdbc driver

We just moved a large production instance of ours from Oracle to
Postgres 8.0.3 on linux. When running on Oracle the machine hummed
along using about 5% of the CPU easily handling the fairly constant
load, after moving the data to Postgres the machine was pretty much
maxed out on CPU and could no longer keep up with the transaction
volume. On a hunch I switched the jdbc driver to using the V2 protocol
and the load on the machine dropped down to what it was when using
Oracle and everything was fine.

Now obviously I have found a work around for the performance problem,
but I really don't want to rely on using the V2 protocol forever, and
don't want to have to recommend to our customers that they need to run
with the V2 protocol. So I would like to resolve the problem and be
able to move back to a default configuration with the V3 protocol and
the benefits thereof.

The problem is that I don't really know where to begin to debug a
problem like this. In development environments and testing environments
we have not seen performance problems with the V3 protocol in the jdbc
driver. But they don't come close to approaching the transaction volume
of this production instance.

What I see when running the V3 protocol under 'top' is that the postgres
processes are routinely using 15% or more of the CPU each, when running
the V2 protocol they use more like 0.3%.

Does anyone have any suggestions on an approach to debug a problem like
this?

Thanks,

--Barry