I just upgraded My copy of VMware Workstation to 7.01 and noticed a performance degradation over the previous version. It's not enough to declare the VM unusable, or to impede my ability to get work done. That being said, the performance hit is noticeable.
I am currently running Ubuntu 10.04 as my host OS and Windows 7 as a guest. Ubuntu 10.04 is not listed as a supported host OS. Last time I had an issue like this VMware Tools was having a problem access the hard drive causing excessive I/O. That doesn't appear to be the problem here. When I run "iotop" I don't see anything odd.