I am wondering how significant will be the performance degradation when a vmware is running on a vmware host. Has anyone a personal experience?
Performance is a relative thing, and depends on the resources allocated to the virtual machine. That being said, creating a second VM on top of another VM is going to give you a performance hit, specifically in disk I/O, because now you'll be going through two layers of virtualization. As to the amount of hit, again, that varies depending on how much processing power you have available to you. I'd advise against doing this, though, unless you really have no other choice.