I am using Ubuntu 9.10 with the latest stable kernel available for it
(don't know the exact number).

Also, I have installed the ATI driver, and VirtualBox.

I have the same problem, while copying is fast (60 MB/second), the
system becomes very sluggish.

I have an Intel i5 with four cores, and none of them are being used: 1.2
GHz, of 2.66 GHz.

Is there any info I can provide to help with the issue?

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System becomes slow while copying files to disk using 2.6.31-14.48 kernel and 
amd64
https://bugs.launchpad.net/bugs/478557
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