If I attempt to move the mouse from one end of the screen to the other, it 
pauses half way in between and cpu usage goes to 80% - 100% (measured in htop)
The lack of responsiveness makes it unusable.
I will try jaunty and see...I don't recall having this issue with it.

Removing vmmouse is a solution for me, but I don't think this should be
ignored.

-- 
[lucid kvm-qemu]High cpu usage when moving mouse
https://bugs.launchpad.net/bugs/553081
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which is subscribed to xserver-xorg-input-vmmouse in ubuntu.

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