I'm using VMware Workstation 7. Are there any performance gains or losses to be had by compacting a virtual disk, or is it strictly a file size gain? If there are any differences with performances, what are they?
As quoted in VMware's release notes, "Compact virutal disk" feature will only free up unused space from a virtual disk.
Assuming you have configured a dynamic size of VM guest virtual disk file, "Compact virutal disk" may only help VM host reclaiming more space for its operating system. It actually may help regaining some performance of VM host if it is lack of diskspace for its running OS.
For enhancing VM guest performance, it is relatively useful to defragment its virtual disks within WMware workstation GUI.
Procedure will be like these:
You will see some performance gain once you start the guest VM again.
Hope this helps!