Ubuntu Guest (KVM/QEMU) dropping packets

Ubuntu Guest (KVM/QEMU) dropping packets

I am running an Ubuntu VM which recently has been very flaky with network
connectivity. I thought it was due to a dupe MAC address, so I assigned it
a new MAC and let it use DHCP instead of the static address. It is
dropping only on the RX, so I increased the RX ring using ethtool from 256
to 1024. When I run TCP dump, the kernel is dropping most of the packets
(3400 out of 3600). Load averages seem fine. I tried switching from virtio
to e1000 driver. Disabling name resolution in tcpdump causes all packets
to be received. Lastly, I see a high number of dropped TX packets on one
of the bridges of the Host hypervisor, but brctl shows that this bridge is
not connected to any VMs at all, and a tcpdump on the host shows no
dropped packets. Thoughts? Ubuntu 12.04.2 LTS 3.2.0-48-generic SMP x86_64.
The driver of the NIC seems to be operating at Gbit according to ethtool.