Limited performance on multi core server

Hi,

I have a 4 * dual core 64bit AMD OPTERON server with 16G of RAM, running
postgres 7.4.3. This has been recompiled on the server for 64 stored
procedure parameters, (I assume this makes postgres 64 bit but are not
sure). When the server gets under load from database connections
executing reads, lets say 20 - 40 concurrent reads, the CPU's seem to
limit at about 30-35% usage with no iowait reported. If I run a simple
select at this time it takes 5 seconds, the same query runs in 300
millis when the server is not under load so it seems that the database
is not performing well even though there is plenty of spare CPU. There
does not appear to be large amounts of disk IO and my database is about
5.5G so this should fit comfortably in RAM.

changes to postgresql.sql:

max_connections = 500
shared_buffers = 96000
sort_mem = 10240
effective_cache_size = 1000000

Does anyone have any ideas what my bottle neck might be and what I can
do about it?

Thanks for any help.

Matthew.