A slow site (slower than 70% of other sites)

A fast site (faster than 97% of other sites)

Google's logic makes sense in that page load speed is an important factor in the user experience (how long do we wait not before we get frustrated with a website - it used to be 15 seconds - but I think now 5 seconds is more common).  Also Google's spiders need to scan millions of sites across the web, so the slower the site the less time they can spend spidering a site.  So this ranking factor is now a double whammy:  Google will spider less of a slow website's pages and will add an extra penalty. 

Fortunately Google provides a handy tool to identify why a particular site is slow.  This highlights the error by order of priority and experience has shown that solving any high priority issues alone can make a significant difference to page load times.

In simple terms they come down to:

• use a website content management system that writes efficient code (you will need to see your web developer's recommendations here)
• optimising the balance between image quality and image file size
• use a hosting company that does not put too many websites on one server (pay a few pounds more and you get faster hosting and in general exponentially better service from the hosting company if anything goes wrong).  If you website is heavily graphics orientated, has heavy traffic usage or time critical like an ecommerce site then use a semi-dedicated or dedicated server.   These cost considerably more but needs must.

Whilst Google's Matt Cutts has sought to re-assure web owners that this will not be a significant ranking factor, the world of SEO is about trying to do everything as well as possible so it is certainly worth speaking to your web developer about.