My bad: I have made a wrong adjustment and vardiff stopped upping the difficulty at all, overloading servers with huge number of low-diff shares. This is fixed now. On the bright side, an improved miner is soon to be released.
Now I think it's worse. It goes to extremes from such low diff that it spams server and hashrate drops to 7.xx Mhash (280x) to such high diff that all I get are reject/stales.
You can now enable fixed 0.28 difficulty by using 'VIP' as password. I gave up on trying to make a vardiff algo suitable both for fast and slow miners.