Azure SQL wait operation timed out

Yes, you're right, you're probably being stifled by other high-resource utilizing tenants that have been placed on the same machine your db was on.

By default, Sql Azure provides guarantees an SLA on availability but not performance. If you're looking for consistency in performance, you should look into their premium tier: http://www.windowsazure.com/en-us/pricing/details/sql-database/

In the premium tier, your db will be guaranteed say a couple of cores, memory and IOPS (think of it like a mini VM)