Ognjen had the same problem with very sluggish performance in his TFS. He had the presence of mind to post his question to the MSDN newsgroups, and get the answer from Mike Attili, who redircted him to Buck Hodges blog post (see post below).
Ognjen, thanks for leaving us the comment! We eventually found it on Google, but had we read your comment earlier it would have saved us lots of grief. We owe you a beer next time your in Seattle! Thanks again!