I am not just talking about defragmenting VMFS but the actual Virtual Machine virtual disks. Like real hard drives performance can suffer due to fragmentation. See the insert below from vmware.com
Like physical disk drives, virtual disks can become fragmented. Defragmenting disks rearranges files, programs, and unused space on the virtual disk so that programs run faster and files open more quickly. Defragmenting does not reclaim unused space on a virtual disk; to reclaim unused space, shrink the disk.
For best disk performance, follow these steps:
1. Run a disk defragmentation utility inside the virtual machine.
2. Power off the virtual machine, then defragment its virtual disks from the virtual machine settings editor (VM > Settings). Select the virtual disk you want to defragment, then click Defragment.
Note: This capability works only with virtual disks, not physical or plain disks.
3. Run a disk defragmentation utility on the host computer
Defragmenting disks may take considerable time.
Note: The defragmentation process requires free working space on the host computer’s disk. If your virtual disk is contained in a single file, for example, you need free space equal to the size of the virtual disk file. Other virtual disk configurations require less free space.
So be kind to your VM’s and defrag their virtual disks. I recommend defraggler, I know it sounds silly but it does quite a good job. Download it here.