This is an ongoing issue that bothers me from time to time since our VMware Infrastructure in production. There could be quiet a few reasons cause this problem. Everytime it spikes, the whole machine is rendered useless. I have done:

1> Applied ESX3.5 Update 1 and VirtualCenter 2.5 Update 1 (This CPU problem has been fixed for a while, however, it came back recently.)
2> I am holding off the April-30-2008 patch because people are saying it brought back the CPU problem which Update 1 had fixed.
3> I switch DRS from Partially Automatic to Manually. So there should not be any Vmotion happened until next patch for this CPU issue. I have observed that Vmotion could be one reason to trigger this High CPU issue.
4> However, yesterday, it happened right at 5PM (without any Vmotion). So I guess it has to be something scheduled to run at 5PM. Eventually I realized MS System Center Essential Agent was installed on this VM. uhha! It was a left-over. Uninstalled it and hopefully that was it.

This issue has been driving me NUTS!