High IOWAIT times, low iops? Can't figure out what the bottleneck is...

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
5-10+ 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
0.97 0.00 0.82 89.69 0.00 8.52

Device: tps MB_read/s MB_wrtn/s MB_read MB_wrtn
sda 85.40 0.18 0.72 0
3
sdb 0.00 0.00 0.00 0
0
sdc 30.43 0.00 0.76 0
3
sdd 93.91 0.71 0.12 3
0

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

we're using ReiserFS on each of the arrays as the file system
OS is debian Etch x64

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

8GB RAM, core 2 duo - quad core 2.4ghz 8MB L2 Cache

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. If i try to copy a big file (1-2GB) over to the
array, the array hits 300MB/s sustained, it can burst write files < 256mb AT
800MB/S

Here's some of our settings

shared_buffers = 1024MB
temp_buffers = 32MB
max_prepared_transactions = 50
work_mem = 64MB
maintenance_work_mem = 256MB
max_stack_depth = 7MB
max_fsm_pages = 512000

vacuum_cost_delay = 20ms

fsync = on
wal_buffers = 1MB
checkpoint_segments = 32

effective_cache_size = 4128MB

If you guys have any suggestions it would be greatly appreciated

-Evan Reiser