Core vs. I/O Voltage

I guess I don't understand the relationship...Maybe someone out there does...

If I run my system with core=1.65V and IO=3.5V, the system is stable.
If I run the sytem with core=1.7V and IO=3.3V, the system is stable.
If I run the system with core =1.65V and IO=3.3V, the system becomes unstable.

Does anyone know what the relationship of one to the other is? Also, given the above scenario, which would be preferred...running the core hotter, or the rest of the system?

Thanks.