If you are seeing lag like that, it sounds like it is most likely the connection speed, in particular your upload bandwidth, that is causing it. Does your hosting provide a guaranteed speed for upload bandwidth? I have 2MB up and my server can probably handle about 150-180 before performance started to take a serious hit. Most professional hosting offers 100MB up/down, so that shouldn't be a problem, but it sounds like the same symptoms.
As long as your server is running fairly new source code from the SVN, your database should be fairly up-to-date as far as that goes. Anything else causing performance hits might be due to either certain settings for your server, or possibly from quests or something that is eating a lot of your resources. One thing that I did that seems to help quite a bit for raid zones was to change the rule for zonewide spawn updates from 1 time per minute to 1 time every 10 minutes. Having it set longer like that can cause minor issues with spawn position ghosting if people are running through a large zone with lots of roaming npcs that have long path ranges, but it isn't anything major.
What is your CPU running at, and how much memory does the server have?
BTW, I don't want any payment lol. I give my help for free to anyone that I can :P
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