We think we found the issue which has been causing the site to clock or completly timeout in the mornings. Apparently updatedb has been running daily to refresh the locate db and the process lingered for several hours eating up memory and cpu utilization. Since we obviously don't need to use locate on the server (as much as we need responsiveness!) we've removed it from cron.
Hopefully this will fix the issue. This however doesn't mean that we'll continue to stay on the dreamhost dedicated server indefinitrely. We'll continue to persue moving the site to ibiblio.