Can't find bottleneck on LAMP stack with APC and Varnish

Hi,

I'm having some performance issues on my 1024 Linode. I'm running Apache, MariaDB and PHP (as mod-php5 with the Prefork-MPM). The Linode serves about 15 sites, 90% of them WordPress blogs and traffic is light, just that load times were pretty low.

I was trying to get some more juice out of it and read a lot of tutorials and articles. In the end I installed Varnish and moved Apache to port 8080. I also installed APC. The most relevant site (the one I've done all the testing on) has also W3Total Cache installed.

The issue is that I see no improvement. Whatsoever. I expected a huge gain with Varnish, and yet I get no improvement. I monitored varnishstats and varnishhist and I know for sure that Varnish is serving cache, it's just taking the exact same time Apache does.

These are my results with ab so far after several tests (non scientifically averaged):

 - without
 + with

Test               Requests per second
----               -------------------
-Varnish:          8.02
+V -APC -W3TC :    8.38
+V -APC +W3TC :    7.70
+V +APC -W3TC :    8.21 
+V +APC +W3TC :    7.91

No significant differences, just a bit of variability. Normal output with everything on (connection times very similar across the different tests):

Connection Times (ms)
              min  mean[+/-sd] median   max
Connect:      173  336 115.1    337    1322
Processing:   400  827 733.0    578    5973
Waiting:      181  376 326.0    318    2274
Total:        638 1162 726.0    923    6274

Percentage of the requests served within a certain time (ms)
  50%    923
  66%    984
  75%   1137
  80%   1219
  90%   1927
  95%   2761
  98%   3317
  99%   6274
 100%   6274 (longest request)

All these tests are run at a concurrency of 10, way below my MaxClients, so the server shouldn't even sweat. My apache conf:

    StartServers           2
    MinSpareServers        5
    MaxSpareServers       10
    MaxClients            25
    MaxRequestsPerChild  5000

Other relevant info:

$ free -m
             total       used       free     shared    buffers     cached
Mem:          1000        900        100          0         41        500
-/+ buffers/cache:        357        643
Swap:          511          6        505

During the tests with ab the system isn't stressing much at all:

$ vmstat 1
procs -----------memory---------- ---swap-- -----io---- -system-- ----cpu----
 r  b   swpd   free   buff  cache   si   so    bi    bo   in   cs us sy id wa
 0  0   6940 101600  42864 514068    0    0     1     7   12   16  1  0 99  0
 0  0   6940 101716  42864 514068    0    0     0     4  223  339  0  0 100  0
 0  0   6940 101576  42864 514068    0    0     0     0  399  389  0  0 100  0
 0  0   6940 101188  42864 514068    0    0     0     0  426  361  0  0 100  0
 0  0   6940 101220  42864 514068    0    0     0     0  426  377  0  0 100  0
 0  0   6940 101180  42864 514068    0    0     0     0  422  357  0  0 100  0
 0  0   6940 101120  42864 514068    0    0     0    56  516  386  0  0 100  0
 0  0   6940 101216  42864 514068    0    0     0     0  498  382  0  0 100  0
 0  0   6940 101024  42872 514060    0    0     0    12  506  386  0  0 100  0
 0  0   6940 101120  42872 514196    0    0   128     0  530  392  0  0 100  0
 1  0   6940 101152  42872 514196    0    0     0     0  546  402  0  0 100  0
 0  0   6940 101120  42872 514196    0    0     0     0  504  375  0  0 100  0
 0  0   6940 101088  42872 514196    0    0     0     0  484  377  0  0 100  0
 0  0   6940 101152  42872 514196    0    0     0     0  546  398  0  0 100  0
 0  0   6940 101184  42880 514196    0    0     0    12  380  347  0  0 100  0
 0  0   6940 101248  42880 514196    0    0     0     0  231  526  0  0 100  0
 0  0   6940 101248  42880 514196    0    0     0     4  188  327  0  0 100  0
 0  0   6940 101248  42880 514196    0    0     0     0  179  316  0  0 100  0

Varnish is using a bit of swap as calculated with the swapusage script. Should there be two instances there?

PID=22369 swapped 320 KB (varnishd)
PID=22370 swapped 300 KB (varnishd)

Varnish conf:

DAEMON_OPTS="-a :80 \
             -T localhost:6082 \
             -f /etc/varnish/default.vcl \
             -S /etc/varnish/secret \
             -s malloc,128m"

And the vcl definition is pasted here

I've also pasted my mysql config on pastebin: http://pastebin.com/cKeDFRaA

I really don't understand what's going on. If I saw some improvement with varnish and the caches I would've been happy, even if the load times still weren't great. But what really confuses me is that Apache is able to serve the same number of requests than Varnish. I hope someone can point out anything that seems strange or at least tell me what to try or where to keep on looking. Thanks.