Would you mind sharing the server specifics? What is the processor / RAM?
What version of Domino is being used?
What Storage System is being used?
NetApp, IBM, and VMware is in the process of publishing a whitepaper on Virtualizing Lotus Domino 8.5.1 on VMware vSphere 4.
This paper is in draft and should be published by the end of the year.
We did the testing on a FAS3020 under a Windows VM with 1vCPU - 4vCPU and 16GB RAM with tests scaling up to 4,000 users
The sweet spot in terms of performance was 2,000 users on 2vCPU and 8GB RAM.
Unfortunalty I do not have iowait stats.
Feel free to contact me via email and I can get in touch with the teams that I worked with during this testing to try and determine where the issue lies.