I tried this with a dual boot windows 2003 and ubuntu 7 host, both running vmware server 2 beta 1. I didn't have the problem you have, but did have to set a memory setting parameter in th econfig file as the nfts-3g driver on ubuntu could not support a particular transfer mode used by vmware with the default parameters set. The only other issue, was having to remove and add the cd drive if i wanted to use it when the guest was running on a different host.
My performance test figures I obtained were inconclusive, as they lacked any consistency. Ubuntu did appear faster on th e memory, while windows was better on the network access. I was using sisoft sandra to obtain some figures. I was using a vista ultimate guest, I also had the host booting into vista (as a third boot option) to compare the performance of the native vm against a vm. I'd be interested if you get any useful benchmark figures.
What was was the ntfs-3g setting you had to change may I ask? And what behavior manifested before you made that change? (Also what scsci virtual driver were you using in the guest o/s?)
It wasn't a ntfs-3g setting, it was in the vmware configuration. I don't remember the setting, but it had something to do with how VM memory operated. Without the setting the vm would not even start, I think there was an unable to allocate memory error in the log. I'm afraid I don't remember which scsi driver I used, I would have just accepted the defaults when I created the VM.