Which is better, Split or Monolithic VMware disk in a production enviroment?
Solution 1:
VMWare Server is out of date and performs rather badly compared to modern hypervisors. Unless you have tagged vmware-server by accident and were meaning ESXi, you seriously should think about using another virtualization solution, especially since you are setting up a new server.
Using split disks would result in a rather large number of files (1,750 2-GB-chunks) which in turn may create interesting interactions with your O/S. As the upper disk limit for VMWare Server is 950 GB, you would not be able to do without any kind of splitting, so the suggestion of creating several disks and using them as PVs within a volume group to get a large logical volume is surely one of the more straightforward approaches.
With ESXi 4, the disk limit is 2 TB, so the basic problem of large disks persists. ESXi 5 allows for larger virtual disks and since it is the latest release, it should be the first choice for your setup, if you want to stick with VMWare's product line.
I would not use split disks in ESXi. All the reasoning for 2-GB splits is either compatibility with software wich did not support larger files the past (old VMWare releases) or better handling in a client virtualization environment. Both would not apply to a usual ESXi deployment and just increase the number of files to handle.
Solution 2:
Having split drives is undesirable if you can avoid them and are concerned about performance. The produce the same effect as a badly fragmented drive, for the simple reason that they are multiple fragments on the physical drive. The only reason I can imagine for not using a monolithic drive is if you backup the drive files and your backup software can't deal with a monolithic one for some strange reason.
Unless you have a real need to break the drive up into multiple pieces don't do it.