ktorrent 3.2.1 on jaunty
Max connections per torrent: 30
Global connection limit: 150
Max number of connection setups: 10

Router: linksys with DD-WRT firmware, set to allow up to 4096 opened connections and to kill TCP and UDP connections after 90 seconds timeout.

With no ktorrent running router will have 100 to 300 connections opened. For each torrent router will open another 600 (roughly) connections (if there are enough peers). Ktorrent will not connect to more peers then specified in settings, but it still opens all those connections. This leads to slowdowns. First couple minutes after restart ktorrent achieves the best speeds and then slows down after when connections starts to get saturated. I will get much better speed when downloading torrents with 30 seeds and 10 peers combined then torrents with 20,000 seeds and 5,000 peers combined.

KTorrent does not open more connections then it is allowed to.

We have no control over incoming connections, which you will get a lot when you are downloading a torrent with 30000 peers.

Thanks, that answers my question. It seems I should be looking for solution on the router itself.

Try to set the maximum allowed connections of your router to 1024, so it won't saturate your connection. This will stabalize your connection a little.