Caseyjoe,
Think of this as a balancing act where you are trying to optimize the engines power output while maximizing boat speed and minimizing the slip of the propeller as it screws its way through the water. Speed requires power and the power of an outboard engine typically peaks in the optimum RPM range specified by the manufacturer. A common range is 5,000 -5,500 RPM. If the propeller has too much pitch as it did with your first one, the engine will not have enough power in the mid-RPM range to turn the prop much above 3500 RPM. Even at that speed the prop is trying to screw its way forward much faster than the boat is traveling, so the slip is very high causing cavitation. If there were such a thing as a 5 pitch prop, the engine could turn it easily to 5,500 RPM and there would be very little slip as the prop would not be advancing very far with each turn. Of course the boat would be going very slowly. The optimum combination is the prop that is agressive enough to push the boat forward as much as it can with each turn, while allowing the engine to reach its optimum power range and keeping slip at a reasonable level (e.g., 20%). The common way to find the optimum combination is, as was described above, to use a prop calculator to estimate the right kind of prop and then try it out. If the engine RPM is below optimum and all other possible causes have been remedied, then drop the pitch down a little more and try again.