Hi ,
You need to take into account the user load and your system resources for deciding the number of WP.
Analyze your work processes while the development team are complaining of slowness and understand where the bottleneck is.
You can see what your work processes are doing in SM50
You do need more update work processes.
I would increase the UP2 to 2 and upd to 3 and see if it helps
Also , use RZ04 to define operation modes.
That way you can use the available work processes to be available for more Background processing during the night and more dialog work processing during the day or vice versa depending on your requirment.
Also, the ST03N transaction can give you a very good idea about the bottlenecks in the system and thereby improve the performance
Activating smartforms is normally a slow process but you can help your development team withe the improvements from basis side.
Please also see
http://help.sap.com/saphelp_nw70/helpdata/en/02/962817538111d1891b0000e8322f96/frameset.htm
http://it.toolbox.com/blogs/sap-on-db2/tuning-the-number-of-work-processes-part-ii-13173