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I'm currently testing a setup with a Macbook Pro, using a VMWare Fusion Windows 7 VM from an external USB drive. The external drive is 7200rpm but is a tad slow. I would like to know if getting a 5400rpm external drive over FireWire 800 would make working with the VM much snappier.

Here is the drive: http://www.bestbuy.com/site/LaCie+-+Rugged+500GB+External+FireWire+and+USB+2.0+Portable+Hard+Drive/1415254.p?id=1218259981595&skuId=1415254

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First, I would make sure that hard drive access is causing the performance problems, rather than CPU, memory or network. If so, USB is probably the bottleneck (assuming it's 480 Mbit/s USB 2.0), so FireWire 800 might help. This answer suggests putting the VM image on a NAS, and accessing it over gigabit ethernet. Otherwise, you may be at the limit of what can be achieved with an external drive, without using eSATA. – sblair May 30 '11 at 13:22
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Agree that 7200 would be better and the 10K velociraptor or an SSD would be better still. It also depends on what other things you have configured. Too much RAM or CORES assigned to the VM will impact performance

Can you get a Firewire800 7200RPM drive or SSD?

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No it wouldn't since the speed of the drive is lower than 7200rpm, firewire will have the data rate but the hard drive will be the bottleneck.

If you want something fast go for an SSD and then get an enclosure for it, or a 10000rpm velociraptor.

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An SSD in a USB/FireWire enclosure? Sounds like a spectacular waste to me - might as well use a regular USB flash drive. – sblair May 30 '11 at 13:27
We have tested this exact config with Firewire 800 and eSATA and found an improvement for the VMs we were using. It was not inexpensive but did make an improvement for the user. As to a USB flash drive, you must be kidding. – Dave M May 30 '11 at 13:44
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If you've enough room on your internal disk, you'll probably get best results by hosting the VM on that. Both USB and Firewire are significantly slower than the internal bus and will be the limiting factor for your peformance.

You could also consider adding a second internal drive in the optical bay. This is not a supported Apple configuration, but many people have done it with good results. If one of the internal drives was an SSD, you should get pretty good results from that.

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This will result in slower performance as the one drive now handles I/O for the VM and the host. The second drive in the optical drive bay will work better but as noted, not supported by Apple. Have used this config on Windows systems with 7200RPM drives and SSDs with very good results. eSATA and USB 3.0 work well as well. – Dave M May 30 '11 at 14:08
Point taken on shared I/O, but if host I/O needs are not great while using the VM, then performance may be quite acceptable. – barryj May 30 '11 at 14:59
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