Question: Is it possible to throttle down the CPU speed of a VMWare image so that i can simulate a slow computer and test how my software works on a slow machine?
Or is there any other way to do this?

Im using VMWare Server 2.0 and its a CentOS Image.

Answer: 
This is not possible with the Player and Server products, but I believe it is in the ESXi (the free "bare-metal hypervisor" product) and the paid-for products like VMWare Workstation.
Yes, just limit that VM's CPU resources, you can go down to as low as 1Mhz (iirc).

Ah, just spotted the edit/addition - don't know Server 2.0 sorry, only ESX