When you do an update, it first does an "opkg update".
This command downloads the package index file, Packages.gz, for all feeds, from the server. There are 7 in total, a few Mb's, which should be downloaded in seconds.
Once downloaded, each file is unpacked ( they are in gzip format ), and compared against what is installed locally, to determine if updates are available. This processing is all done on the box itself, which is why I asked to run the update from the commandline, so we can see the response.
The logs show however that instead of downloading all 7 in quick succession, there are ( 4 or more ) minutes between each request, meaning that either downloading the file takes very long, or processing the downloaded file on the box takes long.
As the logs show sub-second request times for each request, the problem is not server side, but either in transit, or on the box.