Watchdog is an application that monitors the services on your (dv) server for security issues and availability. When Watchdog is running it spawns off several processes that can consume a lot of memory. We have found that running Watchdog can actually cause instabilities with some servers.
It is our recommendation to not use this module. If you need a monitoring solution you may want to look for an off-site option. Our newer servers are not provisioned with watchdog installed. If you have an older server and would like to remove watchdog you can run the following command via ssh as root to remove the watchdog package.
rpm -e psa-watchdog
Source: http://kb.mediatemple.net/questions/770/(dv)+HOWTO:+Misc.+performance+tuning