The I/O performance on the free "VMWare Server" product *sucks* - because it's running on top of a host OS, and not on the bare metal.
I'm not surprised that FreeBSD Jails had better performance. VMWare Server is great for test environments and such, but I wouldn't ever use it in production.
It's not at all near the same class of product as the VMWare Infrastructure stuff (ESX, ESXi, etc.)
VMWare offers VMWare ESXi as a free download, and I/O performance under it would have been orders of magnitude better.
However, it does have the drawback of requiring a Windows machine (or a Windows VM) to run the VMWare Infrastructure management client.