I wasn't using ml2. I did a havana with neutron-openvswitch-agent. the old way. 
Its not only the latency. When I created external network and assigned 
floatingip and tried to reach it only one or two packets where reaching. it was 
99% packet loss.
________________________________________
From: gustavo panizzo <gfa> [g...@zumbi.com.ar]
Sent: Wednesday, May 14, 2014 2:24 PM
To: Ageeleshwar Kandavelu; <openstack@lists.openstack.org>
Subject: Re: [Openstack] [neutron] GRE network with 5 nodes

On 05/14/2014 03:56 AM, Ageeleshwar Kandavelu wrote:
>
> What I inferred was while using the GRE mode the switch's port were
> constantly blinking indicating heavy traffic. I am aware that in GRE
> mode there is a mesh of tunnels between the various nodes. I assumed
> that the GRE mode was placing a burden too heavy on the switch and tore
> down the setup and created a vlan setup instead. The performance was
> good with vlan.
>
> Is this expected or I had been doing something wrong?
i've observed the same behavior, gre adds more latency than vlan

were you creating new VMs? ml2 pop layer plugin should help in that case



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