We saw 20% to 40% performance loss running Discourse benchmarks under Xen and KVM on multiple servers. We tried and tried, and could not do better than that. A “mere” twenty percent performance loss is equivalent to downgrading from a 3 Ghz CPU to a 2.4 Ghz one.
Ruby in general eats CPUs and I/O for breakfast, it is extremely performance intensive. It’ll take everything you can throw at it, and more – and clock rate matters more than number of cores by a wide margin.