This is the single biggest performance issue with SMP servers, in my opinion. Back in 1.7.2 when the game was bugged and limited to a view distance of 8 my server ran great. When it was fixed, I bumped it up to 10 and quickly found my server didn't like that. Lag happened all the time. Upon attempting to lower it down to 8 again the lag nearly vanished and so did mob spawns. How does this make a lick of sense? They should be completely independent of each other. I currently have it set at 9 and it's a compromise of both with lag and spawns.
This needs to be updated for 1.6.2 as it is still an issue.
Still having this issue in 1.6.2 as well.
This is a major issue for SMP. Villages are ghost towns because the lag is unbearable. Tick spikes to 300+ and everything goes slow-mo. Leaving a village chunk area instantly removes the lag.
Experiencing a lot of this as well.
Can confirm what Machiel tested as this is what is happening on my SMP server. Low spawn rates are directly affected by render/view distance. A view distance of 10 on my SMP server and spawn rates are normal but the server lags like crazy/tick is through the roof. If I set it to 9, it's a compromise between lag and spawn rates. If I set it to 8 lag/tick virtually disappears... and so do hostile mobs.