My server just suffered a crash due to a very high CPU load. Upon a hard and a soft boot it went back to normal again.
Found out from 'top' that php-cgi was consuming exceptionally high loads when the home page of my custom theme was loaded. All other Wordpress sites that I'm hosting have not suffered from this problem.
This could be a theme specific problem so the safe bet for now is using the default theme. The header is in a mess I know and I'll fix that later when I have time.
[Edited: now using this modified K2 theme with my custom theme functions all commented out for the moment, these functions appear to be driving php-cgi crazy when they are loaded. The misery is that why all in a sudden this became a problem as I must have these functions in use for many months. Perhaps I need to revisit slice optimization again such as this one. ]