Extremely Slow Software RAID

I installed CentOS 5.0 and I configured it with software RAID 1, two disks - one IDE 160 GB and one SATA 40 GB.

Here is the setup of the disks:

RAID:
~40 GB RAID 1 md0 ext3
~500 MB RAID 1 md1 swap

Disk1:
~40 gb software raid md0
~500 mb software raid md1

Disk 2:
~40 gb software raid md0
~500 mb software raid md1

After the installation I noticed that the server was very slow so I did a performace test on disk 2, here is the result:
hdparm -tT /dev/hdd first gave me:
Timing buffered disk reads: 6 MB in 3.52 seconds = 1.70 MB/sec
Timing cached reads: 488 MB in 6.92 seconds = 70.57 MB/sec

then gave me:
Timing cached reads: 392 MB in 2.01 seconds = 195.01 MB/sec
Timing buffered disk reads: 2 MB in 3.62 seconds = 566.16 kB/sec

So I assumed something was wrong with the disk and replaced it with an 80 GB IDE disk (same setup as before) and got the following results:
hdparm -tT /dev/hdd:
Timing cached reads: 4 MB in 4.69 seconds = 872.73 kB/sec
Timing buffered disk reads: 6 MB in 3.72 seconds = 1.61 MB/sec

It feels highly unlikely that there is something wrong with both of the IDE disks. So what can be the problem? Can you think of anything?