How can I tell if my SQL Server DB performance is hardware-limited?
You can use DBCC SQLPERF("waitstats"). This will return the wait times of what tasks your SQL server was waiting on. Detailed explanations of each counter can be found online. You can use this information to find out your bottlenecks. 

Also, turn on the client statistics in query analyzer to see the wait times on the client side.

I am assuming you hardware has not changed since your initial test, so since they are constant, I wouldn't doubt them.