An S7-300 has a socalled PDU size of 240 Bytes, and S7-400 has 480 Byte PDU.
An S7-318 is actually an S7-400 in S7-300 clothing.
The PDU is the maximum no of bytes the CPU can transfer by a single read request.
If more than 240 or 480 bytes are requested, it will cause the transfer to be split into several transfers. It will still work, only it will take longer. This is usually not a problem for the various OPC servers that support Siemens S7.
Another bottleneck is that in this particular case, the connection is via a CP (CP343-1 ?) in the S7-300 rack, not directly by an interface port on the CPU.
The CP communicates with the CPU by the slow backplane of the S7-300 rack. This can become overwhelmed if too many data has to pass via the CP.
This could potentially have something to do with the new problem. After the update, does the Kepserver request more data than before ? Or does it request the data at a faster rate than before ?