1- It can speed it up if you are seeing consistent CPU spikes (like almost 100% a lot of the time, on %user and %system). If you are seeing a lot of %wait time, it means the CPU is waiting for IO (memory, disk) and you need to investigate it further.
2- Usually common kernels come compiled for SMP. You can check by doing an "uname -a" (you should see the "SMP" word somewhere at the output).
3- If you have a 32 bit OS, you don't need to worry about CPU Virtualization. Let the hypervisor choose it for you.