VMware published an interesting 12-pages paper comparing the performance achieved in a SAN environment with ESX Server 3.5 virtual machines stored in a VMFS volume and in a raw disk volume (mentioned as Raw Device Mapping or RDM):
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For random workloads, VMFS and RDM produce similar I/O throughput. For sequential workloads with small I/O block sizes, RDM provides a small increase in throughput compared to VMFS. However, the performance gap decreases as the I/O block size increases. For all workloads, RDM has slightly better CPU cost.
The test results described in this study show that VMFS and RDM provide similar I/O throughput for most of the workloads we tested. The small differences in I/O performance we observed were with the virtual machine running CPU-saturated. The differences seen in these studies would therefore be minimized in real life workloads because most applications do not usually drive virtual machines to their full capacity. Most enterprise applications can, therefore, use either VMFS or RDM for configuring virtual disks when run in a virtual machine.
However, there are a few cases that require use of raw disks. Backup applications that use such inherent SAN features as snapshots or clustering applications (for both data and quorum disks) require raw disks. RDM is recommended for these cases. We recommend use of RDM for these cases not for performance reasons but because these applications require lowe-level disk control…
Read the whole paper at the source.