Okay a few things, after I was attacked over the past couple days I decided to do some work myself and found that it is pretty easy to bring the server to it's knees using just apache bench mark.
So while yes it was being attacked, this also means that something is wrong because it shouldnt be that easy to overload the system.
I have tested 20 different lsphp5 lsapi children requests etc. configurations.
I have tested 100 different my.cnf configurations using MONyog and mysqlprimer.pl as guides.
This is in a Virtuozzo VPS with 2GB of ram, running the vps edition litespeed.
I have used apache bench against IPB forums as well as Joomla... joomla having worse results.
All joomla pages I have tried file caching as well as XCache set on them. File actually performed better for joomla but XCache performed better for litespeed
Disk IO wait remains at 0 so it is not disk performance issue.
Exec Dir Patch
Mail header patch
when I configure litespeed php lsapi to use max connections:3 then the PHP processes are at 99% CPU
when I configure max connections:20 then it spawns 20 PHP processes and then mysql spikes to 200% CPU
What can I possibly do to get to the bottom of this... I should be able to run 100 - 1000 users at least. But the system chokes up on a mere 6 requests per second.