Saw a similar problem several years back. Check to see what speed your drives are negotiating at (can be seen at boot time with most controllers). If you see the speed going down as the ID gets higher then it could be a cable problem or lack of SCSI termination. In my case it was the cable.
Good luck in debugging this.
Not necessarily cheap considering the age of the controller. 8 physical drives per logical drive was the standard back in the late 90's when that controller was released.
You could use up to 16 drives using RAID 10 or 50.