I currently have my virtual machines on an external USB drive and the performance is OK. I'm getting a new Dell Laptop with built-in eSATA port. I'm planning on moving the virtual machines onto a eSATA external drive. I would appreciate if anybody can let me know if that helps in performance and if so what are the available eSATA external portable drives that are available in the market. I'm not looking for a very big drive. Even 250 - 320Gb should be fine.
eSATA will be much faster for you since its bandwidth is much wider than of USB2.0.
As for choosing a particular eSATA HDD I have no recommendations - all current models are enough fast. If I were you I of course would buy an external HDD with a longer warranty period and the least HDD platters (the fewer platters the faster, cooler and quieter will be your HDD drive).