A new paper published by the VMware Performance Team shows that virtual disks using vStorage Thin Provisioning perform nearly as well as fully allocated thick disks.
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With VMware vSphere, ESX, and VMFS, running out of space on a datastore does not cause damage to virtual machines. It is easy to recover without even a guest OS reboot.
When a datastore in your VMware vSphere environment is about to fill up, you can have vCenter automatically spring into action to prevent downtime by using Storage VMotion.
VMware vSphere 4 offers thin provisioned virtual disks backed by management that enables safe use in a production environment thanks to advanced accounting of all provisioned space.