A. In Server 2008, writing to dynamically expanding disks (which allocate space to the Virtual Hard Disk (VHD) as needed) took about three times as long as writing to fixed-size VHDs (in which all space is allocated when the VHD is created). This performance difference is mostly because of the limited metadata caching performed for dynamic disks.

This has been remedied with Server 2008 R2. The performance of dynamic disks is essentially equal to that of fixed disks. There's no significant performance disparity. This means you can now seriously look at using dynamic disks in a production environment instead of fixed disks. However, you should still pay very close attention to how much disk space you're committing to on each volume. You don't want to be in a situation where you stage lots of dynamic disks that grow beyond the size of the underlying physical volume.

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