CPU load high

Hello.

I have a web-server with php 5.2 connected to postgres 8.0 backend. Most
of the queries the users are doing are SELECTs (100-150 in a second for
100 concurrent users), with a 5-10 INSERTs/UPDATEs at the same time. There
is also a demon running in the background doing some work once every
100ms. The problem is that after the number of concurrent users rises to
100, CPU becomes almost 100% loaded. How do I find out what's hogging the
CPU?

'top' shows demon using 8% cpu on top, and some amount of postgres
processes each using 2% cpu with some apache processes occassionally
rising with 2% cpu also. Often the writer process is at the top using 10%
cpu.

And the second question is that over time demon and writer processes use
more and more shared memory - is it normal?

Thanks in advance.