Tuning Help - What did I do wrong?

We have a pretty busy linux server running postgres 8.1.4, waiting to
upgrade until 8.3 to avoid dump/restoring twice.

# cat /proc/meminfo
        total:    used:    free:  shared: buffers:  cached:
Mem:  3704217600 3592069120 112148480        0 39460864 2316271616
Swap: 2516918272   270336 2516647936

# cat /proc/cpuinfo
processor       : 0
vendor_id       : GenuineIntel
cpu family      : 15
model           : 4
model name      : Intel(R) Xeon(TM) CPU 3.00GHz
stepping        : 3
cpu MHz         : 2992.795

The postgresql.conf was basically the default so I decided to
increase the cache size and a couple paramaters to make more use of
that memory - here's what I did:

shared_buffers = 16384 (was 1000)
work_mem = 16384 (was 1024)
wal_buffers = 24 (was 8)
checkpoint_segments = 5 (was 3)
effective_cache_size = 10000 (was 1000)
stats_command_string = on (was off)
stats_block_level = on (was off)
stats_row_level = on (was off)

In order to do this I had to change /proc/sys/kernel/shmmax to
536870912 (don't have /etc/sysctl)

Also, the entire cluster gets vacuumed analyzed nightly.

After making these changes, the performance on the server actually
worsened.   I slowly backed off on some of the paramaters but didn't
seem to help.

Wondering if those changes are silly?  For a server this size I
didn't think this would be problematic.

Thank you,

Josh