Good answer to a frequently asked question on the new VMware Storage Blog. Click through for a nice quick read.
The dynamic, flexible environment that we call VMware Infrastructure
requires shared, coordinated storage between ESX servers. There are two
families of storage technologies that can meet this requirement today,
SAN-based block storage (e.g. Fibrechannel or iSCSI) and NAS. VMware
supports both forms of storage access for our customers. …
So which to use? The first criteria is to continue to use the type
of storage infrastructure you are familiar with. If your organization
uses block based storage – use VMFS. If NAS is in use, it may make
more sense to deploy VMware Infrastructure with NFS. Other aspects of
storage management, such as the basic virtualization of storage on
behalf of the VM or the internal structure of the virtual disk files
(VMDK) are handled independently of this choice. You get the same high
level VI functionality regardless.
For new deployments, there are the traditional storage tradeoffs. …