Sleeping Tasks and SQL Database

[purepowergames]

We have an app that we put on MySpace - it is hosted on a dedicated box and is database driven. Game is a static game and performs updates to the database and queries on stats and such. It is a battle type game, where actions such as attacks will change attributes on two players, as well as update the game news. We have overcame numerous hurdles and changed programmers mid-way. The guy we have now is GREAT, however we have a couple things that are killing us. Currently, we have 16,000 registered users, with no more than 1,000 playing at a time. My datacenter is telling me that sleeping processes are killing our CPU usage. I have went in through SSH and did a top command and received the following;

Tasks: 228 total, 4 running, 222 sleeping, 1 stopped, 1 zombie
Cpu(s): 63.9%us, 3.0%sy, 0.0%ni, 32.7%id, 0.1%wa, 0.0%hi, 0.3%si, 0.0%st
Mem: 3907620k total, 3872628k used, 34992k free, 6860k buffers
Swap: 4192956k total, 2718480k used, 1474476k free, 459632k cached

PID USER PR NI VIRT RES SHR S %CPU %MEM TIME+ COMMAND
28481 nobody 25 0 147m 7704 3104 R 96.5 0.2 0:10.29 httpd
18188 nobody 19 0 147m 9656 4344 S 83.9 0.2 4:38.19 httpd
27835 nobody 16 0 147m 8776 3812 R 10.0 0.2 0:05.11 httpd
2819 mysql 15 0 577m 71m 2988 S 8.3 1.9 570:55.50 mysqld
27803 nobody 16 0 147m 8904 3888 S 5.7 0.2 0:05.47 httpd
28040 nobody 16 0 147m 9008 3976 S 5.3 0.2 0:02.02 httpd
17822 nobody 15 0 214m 23m 5308 S 4.7 0.6 4:12.93 httpd
27465 nobody 16 0 147m 8424 3572 S 2.7 0.2 0:09.67 httpd
27838 nobody 15 0 147m 8880 3756 S 2.7 0.2 0:31.66 httpd
26977 nobody 16 0 147m 8704 3748 S 2.3 0.2 0:09.09 httpd
28046 nobody 16 0 201m 10m 5356 S 2.3 0.3 0:01.72 httpd
27619 nobody 16 0 147m 8388 3536 R 2.0 0.2 0:05.00 httpd
28033 nobody 15 0 147m 8864 3796 S 1.3 0.2 0:02.42 httpd
28490 nobody 15 0 147m 8048 3332 S 1.3 0.2 0:00.04 httpd
17606 nobody 16 0 154m 16m 5064 S 1.0 0.4 4:28.02 httpd
26941 nobody 16 0 147m 9092 4060 S 1.0 0.2 0:07.86 httpd
27187 nobody 15 0 212m 18m 5796 S 1.0 0.5 0:06.93 httpd

These are our server specs;
CPU (C2Q)
Q9550 (4x2.83GHz 12MB)
Memory
4GB DDR2 RAM
HDD1
250GBs SATA-II
HDD2
250GBs SATA-II
IP's
8 included
Bandwidth
2000 GB
Port Speed
100 Mbit

Any idea what direction I should go in to see what is bottlenecking my server and bringing it to it's knees??? Sometimes the lag is incredible and there really aren't what I would consider a LOT of people online - may a few hundred.

Thanks in advance for ANY insight you can provide.
Mike