Symptoms
Creating a folder using SharePoint SmartObject in a library with 11K documents and 8 K folders takes 10-30 seconds.
Creating the same folder from web interface of SharePoint 2010 takes less than 1 second.
Diagnoses
We managed to reproduce this issue and our labs team provided a performance coldfix.
Resolution
After implementing the coldfix, a big performance increase was found.
With the new dll creating 3 folders one inside one takes less than a second,
before it was taking 15-20 seconds.