In this article, we evaluate the performance effects of I/O bound workloads on a specific virtual machine, an important component of an enterprise cloud computing infrastructure. In particular, we demonstrate that (1) the I/O workload of one guest system may adversely affect the I/O performance of another for the XEN hypervisor and (2) the general I/O performance is degraded due to various overheads. Next, we have devised a light-weight, complementary, backwards-compatible alternative to hypervisor-based virtualization techniques called Bonsai. Our software provides low-overhead I/O performance isolation by transparently applying traffic shaping to system calls in a cost-effective manner. Using this system, I/O resource consumption can be controlled at a very fine granularity. Furthermore, using video streaming experiments, where we limit the I/O bandwidth available to each service, we show that we are able to achieve the required level of resource isolation on a per process basis with only a negligible CPU overhead and without reducing the I/O performance.