Host is Ubuntu 10.04 Server. 8 physical cores. Guest is Ubuntu 12.04; its allocated two CPU. I have other VMs, but the last few days I've run only this one guest.
Top inside the guest reports load from .05 - .20. Host sees this one kvm process 80-120% CPU, and maintains a total load of around 1-1.2. Host has no other workload than hosting guests.
This is not a problem with ksmd though I did have that problem and disabled ksmd after playing around with different values to no real satisfaction with the performance. Otherwise, the KVM settings are the default installed by the Ubuntu packages.
I installed this server fairly recently, and I have probably had this problem the entire time. At least, since I started running any regular workload on the guest.