PostgreSQL strugling during high load

Hello,

We have problems with one postgresql database with high
data change rate. Actually we are already under pressure
to change postgresql to Oracle.

I cannot post schema and queries to list but can do this
privately.

Tables are not big (20000-150000 rows each) but have very high
turnover rate - 100+ updates/inserts/deletes/selects per second.
So contents of database changes very fast. Problem is that when
pg_autovacuum does vacuum those changes slows down too much.
And we keep autovacuum quite aggressive (-v 1000 -V 0.5 -a 1000
-A 0.1 -s 10) to not bloat database and to avoid bigger impact.
analyze seems not to impact performance too much.

Tables have 2-3 indexes each and one table have foreign key
contraint. Postgresql is 8.0.1. vmstat shows that IO and CPU are
not saturated. DB is on RAID1+0 controller with battery backed write
cache.

What can we tune to improve performance in our case? Please help
to defend PostgreSQL against Oracle in this case :).

Thanks,

Mindaugas