This problem has been much worsened by the latest beta (257.9), to the point where my game is practically unplayable, the framerate drops to about 10 FPS. This is running on a 4th generation iPad. Also tested on an iPhone 4 with the same (but worse) effect.
What happens is when I have more than about 35 active objects overlappning eachother, the game just bogs down. If I move enough of the objects apart from eachother, FPS goes back up to 60, and when I start overlapping them again, the framerate drops steadily with each 2-3 objects that are overlapping.
This is a CPU problem since I can see its only the CPU working in XCode.
I tried removeing alpha channels thinking it could be the cause, it had no effect. I also tried remoing any event checking if the objects overlap with other objects, since I know that events checking for overlap can be slow if there's a lot of objects, but it had no effect whatsoever.
So it seems to be some kind of unnecessary checks are running if objects are overlapping which bogs down the CPU?
This is very much preventing my game from working properly..