Performance of NIOS II is 15.5 DMIPS...

affluent007, what is your end system going to do (not the standard design)? Although DMIPs values are an industry standard, seeing a low value isn't the end of the world (when you have a softcore processor embedded in an FPGA, there is a lot you can do to gain performance by adding additional hardware). Like James said, moving up to the f core will improve the timing and the DMIPs/MHz ratio (just take the standard design, open it in SOPC Builder, double click the Nios processor and switch it to the 'f' core). There are many things that impact the DMIPs rating (the core type, cache, memory type, etc...).

Also so that you know, in the same folder as the standard design is another design called "fast", you may want to give that one a try (it has onchip memory, i&d cache, f core (with level 1 debug), timer, and a JTAG uart).