Nginx as a proxy to node.js application - server busy

I have a freebsd server running two jails on one jail i have nginx and
and
on the other jail i am running a node.js application.

Here is the nginx.conf file:
https://gist.github.com/nkhine/f620f8bdc0fb613b7b59

when viewing the site, every other request seems to time out and i get
The connection has timed out message.

is there anything obvious i am doing incorrectly?

all css and javascripts are served by nginx, as i have loaded the
public/views directory as read only into /var/www inside the web server
jail

any advice on how i can improve this is much appreciated.

Posted at Nginx Forum:
http://forum.nginx.org/read.php?2,252446,252446#msg-252446