Site Slowdown On VPS

I bought a linux (cent os 4) vps with 128MB RAM on a 5Mbps connection. I am hosting just one proxy site using lighttpd and it uses about a Gigabyte of bandwidth per day. It gets between 500-900 uniques per day. The problem I am having is that the site is very slow even though it is not using much ram or cpu resources:


top:
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top - 21:04:04 up 4:18, 0 users, load average: 0.02, 0.01, 0.00
Tasks: 18 total, 2 running, 16 sleeping, 0 stopped, 0 zombie
Cpu(s): 0.2% us, 0.0% sy, 0.0% ni, 99.8% id, 0.0% wa, 0.0% hi, 0.0% si
Mem: 262144k total, 39200k used, 222944k free, 0k buffers
Swap: 0k total, 0k used, 0k free, 0k cached
PID USER PR NI VIRT RES SHR S %CPU %MEM TIME+ COMMAND
13565 admin 15 0 17540 7984 5372 S 0.3 3.0 8:32.33 php-cgi
1 root 15 0 1696 604 520 S 0.0 0.2 0:00.42 init
7277 root 15 0 6916 2260 1820 R 0.0 0.9 0:00.01 sshd
7303 root 15 0 2224 1304 1064 S 0.0 0.5 0:00.00 bash
7340 root 15 0 1952 968 788 R 0.0 0.4 0:00.00 top
11414 root 18 0 1596 548 456 S 0.0 0.2 0:00.12 syslogd
11638 root 15 0 4068 1144 840 S 0.0 0.4 0:00.04 sshd
11861 root 19 0 2148 816 684 S 0.0 0.3 0:00.01 xinetd
12244 tinydns 15 0 2540 356 284 S 0.0 0.1 0:00.07 tinydns
12245 dnscache 18 0 3724 1552 500 S 0.0 0.6 0:00.03 dnscache
13546 apache 15 0 11376 8776 1284 S 0.0 3.3 0:13.50 lighttpd
13558 admin 18 0 16556 5680 4036 S 0.0 2.2 0:00.00 php-cgi
13653 root 16 0 2224 1116 964 S 0.0 0.4 0:00.00 sh
13704 root 18 0 3468 1368 1108 S 0.0 0.5 0:00.05 lxadmin.exe
13796 lxlabs 15 0 3828 864 516 S 0.0 0.3 0:00.87 lxadmin.httpd
13903 root 21 0 2220 1140 972 S 0.0 0.4 0:00.00 mysqld_safe
14090 mysql 18 0 11640 4328 3416 S 0.0 1.7 0:00.06 mysqld

openvz-free.sh
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privvmpages usage: 38 MB (14%)
privvmpages usage: 39088 KB (14%)

What could be the cause of the slowdown? Is it the 5mbps connection? How can I be sure?