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Internal and External SCSI arrays should work equally well for handling multiple simultaneous requests from a single hardware server running multiple virtual servers. Although many low-end servers (pizza-box 1U style) may have "RAID" onboard, be forewarned that they may only have 2 SATA ports, meaning you can run drive mirroring (RAID1), or drive striping (RAID0), but not RAID5, which includes the redundancy features of RAID1 coupled with the performance benefit of RAID0. RAID5 requires a minimum of 3 hard drives. SCSI does seem to work better than SATA for virtualization performance, but depending on how much cpu is hit on each virtual server, you can run RAID1 on a server hosting VM's without too much performance decrease. Note that this is not ideal for Microsoft Exchange, or SQL databases where you have multiple user requests simultaneously. ISCSI is preferred for that kind of environment.
In a one-OS-per-server environment, hard drives are dedicated, and usually in a server, support multiple requests at once, so that several users or applications can access files without waiting for the first transaction to finish. With a hypervisor, not only can one or more applications or users be making multiple simultaneous requests in each VM, but with multiple VMs, the situation is actually exacerbated.
It is critical, therefore, to use storage that at least supports multiple disk requests, or rather to avoid storage that doesn't support them. A single internal SATA disk is the least desirable form of storage for a hypervisor, since it does not support multiple simultaneous requests. Single internal SCSI (including SAS) drives are better, then internal SCSI arrays. For external storage, network attached storage is generally least optimum, then iSCSI, then fibre channel storage. All other things being equal, the fastest drives and fastest interfaces will work best.
This doesn't mean that you can't run a hypervisor on a SATA drive, just that performance will not be optimum.