>The first thing you MUST try is adding more memory - increase it to AT 
>LEAST 1Gb Ram.
>As you yourself said, the thing using most CPU is kswapd, so you should 
>add memory to drastically reduce or eliminate swapping before deciding if 
>you need more processors. In my experience Linux is NOT cpu hungry like 
>other operating systems, and memory is MUCH more important.

If is important to note, as far as stability goes,  that some operations
must occur in physical RAM (particularly network drivers allocate and
release physical RAM for buffers all the time).    Thus bieng hard out
to swap and tying up the CPU in kswapd will cause instability and can
even crash the network device driver,  as it will simply take too long
for the CPU to find it any pages.  You may be able to increase stability
by adjusting vm.freepages to set aside more RAM exclusively for the
kernel (I do this on most of my servers) but your still going to have
serious performance problems with only 256Mb of RAM.



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