Read caching comes from SSDs or Flashcache etc (i don't think the 2240 has). According to your output, you're hitting cache 100% for reads (system ram). But it doesn't look like it's maxing disk or cpu util.
Is there any dedup or compression turned on the volumes?
Also, look at what else is in the chain. FC switch etc... How are their counters looking?
Think of ONTAP as a dam, It's designed to take as much water on as it can within its design (writes) , however, it can control how much it will release the water (read). And controlled release, is safer and more stable than just letting it all go at once as that could destroy the damn.
I thought about this, an overloaded system will have a bad response, and other users will not be able to work comfortably. You're right. We will stop on this, we will not over-utilize the system by squeezing all the juices out of it.
So a couple things here: 1) is your FAS 2240 sized for 300-400 MB/s from the account team? 2) 3.5" 7200 RPM SATA drives have a poor profile of performance, so you're hitting a potential latency bottleneck on the disks themselves just because of the rotational speed and size, and SATA interface. The statit output shows decent response (22 chains * .2 ms is about 4.4ms per op).
It's also possible the bottleneck is further upstream. Have you looked at the response times from vSphere?