High IOWAIT times, low iops? Need Help with configuration

I was wondering if you guys have some suggested settings for our server, i
think we are not hardware limited but the configureation is set up
incorrectly. For some reason our database seems to have trouble handling
10+ inserts per second which seems to be a pretty trivial load for this
hardware, we're seeing very high %iowait, this is a pretty typical output
for #iostat -m 5

avg-cpu: %user %nice %system %iowait %steal %idle
0.41 0.00 0.41 96.28 0.00 2.90

Device: tps MB_read/s MB_wrtn/s MB_read MB_wrtn
sda 90.63 0.08 0.56 0 2
sdc 0.00 0.00 0.00 0 0
sdd 94.09 0.19 1.74 0 8

sda = 2x320GB 7200rpm in RAID1
sdc = 2x150GB 10krpm in RAID1 (transaction log is on this array)
sdd = 6x150GB 10krpm in RAID 10 (database is on the array)

raid controller = 3ware 9650 12port - 256MB cache

8GB RAM, core 2 duo - quad core

it would seem like the io subsystem is the limiting factor, but i feel like
we should be barely hitting a wall, you can see from the example its writing
< 2MB/s to the array

Here's some of our settings

shared_buffers = 256MB # min 128kB or max_connections*16kB
temp_buffers = 32MB # min 800kB
max_prepared_transactions = 50 # can be 0 or more
work_mem = 32MB # min 64kB
maintenance_work_mem = 32MB # min 1MB
max_stack_depth = 7MB # min 100kB

max_fsm_pages = 512000 # min max_fsm_relations*16, 6 bytes

fsync = off # turns forced synchronization on or
off

If you guys have any suggestions it would be greatly appreciated