I've played WOW for 4 years but never really got into the theory crafting that people do but that seems inevitable now. This is my current gear and doing Ulduar. I can break 3.2k DPS no problem but looking for a way to increase that if possible. I have every trinket I believe from Naxx/Badge so I can adjust those. My normal Rotation is: VT, MB, MF, SW:P, DP repeat as needed. Please any help that you guys give would be awesome. Thanks!
1st. Your hit is -WAY- too low. The cap is 289(Without a draenei's aura) and you're not even close. Work on that. You said you have every trinket from Naxx so you should replace your Extract with Dying Curse for more hit. The Extract sucks anyways, so get rid of it.
2nd. You're missing Veiled Shadows on your spec, which is a straight dps increase with Shadowfiend being a huge dps source currently. Coming to that, you should use Shadowfiend as a source of dps if you are comfortable with your mana in fights. On fights such as Deconstructor or Razorscale it really does help your dps if you find the time to cast it twice in the fight.
3rd. You are missing a enchants, you have green gems and you have the wrong gems. Including your meta. You should use Chaotic Skyflare Diamond as your metagem, as it is far superior compared to every other meta at the moment. You should also get rid of the spirit and int gems. Those are just bad. You should only ever gem for +hit and +spellpower AND purple gems(Such as the Purified Twilight Opal) that give you the socket bonus for your Chaotic Skyflare Diamond. Currently in 3.1 it is also beneficial to gem a Potent Monarch Topaz on yellow slots that give a good socket bonus, but I this is just the case with good socket bonuses such as raw spellpower increases. Just get proper gems and enchants, not getting them is just bad.
I could go on, but I don't have the time. I will do some more later today if someone doesn't get there before me.
Yes, you need more hit. The hitcap is extremely important for shadow priests if only for one reason: Devouring plague. If it misses, that's a decent chunk of your DPS that's gone for 24 seconds. Check out www.shadowpriest.com for gear lists and advice.
www.shadowpriest.com has a gear list that ranks the best possible gear... it's best to use that as a guide for what items you should consider using. That thread will also introduce you to PP values which will teach you how to evaluate stats. It will also give some insight to better gem choices, as it stands you have a pure int and spirit gem in your gear which is bad dps itemisation. You should also do away with green quality gems, if you really want to do Udular properly start investing in blue quality. TBH the only gems you should even consider are:
You generally want to use pure SP gems as much as possible, occasionally socket bonuses make the other gems slightly better but it really depends on the item and the socket bonus. (On a side note hit is now weighted as 1.31 pp, so a 16 hit gem is technically better than a 19sp gem but probably best to ignore that right now).
Your Meta gem choice is poor, you should change it to the CSD but note that this will require 2 blue gems to activate and this is where you want to find slots for 2 Purified Twilight Opals... in some rare cases it can be better to use the Misty Forest Emerald but its only worth doing if you can get more than 3.32pp from a socket bonus you'd otherwise miss out on. Again probably best to forget about this too (at this stage).
Considering how poor your hit is (166 rating when I looked) you should possibly consider geming full hit until you reach 289. Some other easy ways to gain hit would be:
Those items alone would yield 142 hit which actually puts you 19 rating over the hit cap, but you could regem some of those 12 hit gems with something better.
I could talk all day about how you could improve your gear but you're best to read shadowpriest.com and formulate your own plan.
The next point to consider is your spec... most people consider the current cookie cutter spec to be this. It's interesting to see you have 0 points in meditation, presumably to pick up Shadow Affinity & Imp VE. If you really want these talents then I would suggest you are better to take the points out of Spirit Tap & Imp Spirit tap so you end up with this instead. I think you'd find that your raw dps would be almost identical but your mana regen would be a lot better.
Lastly is your spell rotation or priority or whatever you want to call it. Most people will tell you the priority should be VT, DP, SW:P, MB, MF... however from some number crunching of my own and reading some other information out there, it should be MB, VT, DP, SW:P, MF. Basically casting MB b4 dots will result in fewer conflicts in the priority and it results in a lower dps loss. I did post numbers in a thread semi recently here if ur interested in more info. You wont get perfect rotations/priorites in Udular but you obviously want to keep to it as much as you physically can to maximise your dps.