Virtuozity

VMware has implemented some new features in the VMFS file system in vSphere 4 and these updates bring some good news for you: In the past you had to consider the block size very carefully when formatting a VMFS volume, because in VI3 configuration and log files were stored within the VMFS for the first time. This meant that every file allocated at least the chosen block size, no matter how large or small it really was. VMFS in vSphere 4 introduced the ability to store smaller files in so-called 64KB "sub-blocks" to save disk space.

So choosing a small block size will not give you an advantage anymore, it will only limit you in the future in case you want to grow your VMFS! Yes, that's another difference, you are not limited to extents in vSphere 4, now you able to really grow your VMFS, which makes it even more flexible. Unfortunately the VMFS wizard will still ask you to format your volume with 1MB block size by default. I would recommend to choose the largest available block size here to be as flexible as possible, because changing it later is not possible.

By the way, it is definitely false information that the chosen block size will impact your storage performance, but: Another highly acclaimed feature by VMware is thin provisioning. As you already figured out yourself, you should be pretty careful using it in your production environment, although there are cases in which it will be very useful. In my opinion thin provisioning also makes sense with larger VMFS block sizes, because increasing the VMDK file in tiny 1MB chunks doesn't look like best practice to me.