There are 2 changes in recent Karmic kernels that should help:
2.6.31-10.35:
* [Config] Set default I/O scheduler to DEADLINE
CFQ seems to have some load related problems which are often exacerbated by
sreadahead.
- LP: #381300
2.6.31-11.38
* sched: Disable NEW_FAIR_SLEEPERS for now
- LP: #436342
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file transfers on USB disk are very slow
https://bugs.launchpad.net/bugs/197762
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