virtualbox.org

My configuration is: VBox version 3.0.4, Core i7, HT enabled, running Ubuntu 9.04 as host.

I had allocated 4 processors (out of 8 virtual processors, due to HT) to a Windows 2008 R2 VM, but performance is very slow with the configuration. It gets slower and slower, and finally crashes after 2 or 3 hours.
I had the same experience with Windows 7.

Allocating a single processor works as expected, and runs much faster than allocating 4.

I am not sure if this issue is due to HT, in which case will allocating all 8 virtual processors help?

SMP support is still experimental and performance has been an issue since introduction. All you can do at the moment is add your experience to the bug in the Bugtracker and disable SMP. Use the search trick from the Forum Posting Guide to find the bug report.