Robert Goto, a fellow VMware Certified Instructor did some research on the possible benefits to templates versus cloning versus storing a VM in OVF format:
We all know that it can take longer to create a compact template than a normal template. However on the flip side, a compact template normally deploys more quickly. We also know that storing a template in compact format may possible save us room in storage depending on how much free space there is in the vmdk(s).
I took our normal class VM (2GB hard drive) and created a compact template and then exported it to OVF format virtual appliance. Then I compared the resulting sizes of each. OK, I was not going for "exact" numbers, just general indications of size.
• Original VM took slightly more than 2GB to store (as would the resulting normal template).
• Compact template took slightly more than 1GB to store.
• OVF virtual appliance took slightly less than 500MB to store.
This seems to indicate that there is a significant space savings to be had if you store your VMs as OVF virtual appliances instead of templates or clones. Now this does not take into account the time it takes to create and deploy VMs from OFV versus templates, but it did get me to think.
On the other hand Susy Gottberg brought up a good point. You cannot use Update Manager to update OVF appliances. Aaron Thorpe, also VCI adds, It's definitely something interesting to consider. One thing we discovered during a class discussion was, that if you create a compact template, it converts the VMDK to a thin disk. However all new VMs created from this template will also use a thin disk. We were concerned that this may hurt disk performance of all future VMs deployed from the template.
I also did some research and figured out how to create a thin growable disk with the VI-Client. I created a normal virtual machine with a default disk and installed Windows 2003 as a guest. I converted the VM to a template with a thin disk. I copied both the VMDK files to another empty VM without any disk. After that I attached the thin template disks and started the VM. In the guest OS I can see the original size but the VMDK stays small.