It's hard to say for sure what is causing the problem without more information. What is the configuration of the virtual machine in terms of vCPUs and memory? And what about the rest of the VMs on the host? Have you tried using esxtop from the Service Console to try to narrow down where the performance problems might be? One stat in particular that might be of help is the %RDY stat, which if higher than 10% would indicate performance problems on the guests. If you're unfamiliar with esxtop, here are some links to help get you started.
Commonly used esxtop performance counters: http://communities.vmware.com/docs/DOC-5240
Memory analysis: http://communities.vmware.com/docs/DOC-5430
CPU analysis: http://communities.vmware.com/docs/DOC-5420
Storage analysis: http://communities.vmware.com/docs/DOC-5490
Network analysis: http://communities.vmware.com/docs/DOC-5500