I'm looking for some clarification of various things I've read. I understand it to be best practice to store your transaction logs on a separate drive (spindle) than where you MDFs and NDFs are housed.
Does this same principal hold true in a virtualized environment on a SAN?
It's a good idea to keep them separated, even if the drives are currently backed by the same storage device. It buys a lot of future flexibility, at a slight expense in management overhead for both the DBAs and the Windows/storage admins.
If you want to change the physical storage that backs either of the drives in the future, you won't have to go through all the databases and move the files at that point -- they'll already be in the right spot. Simply present different storage to the VM with the same drive letter, and assuming all the files and permissions are there, you're done. Simple.
If you collect Performance Monitor (PerfMon) physical disk stats, it's a good idea to record data file activity separately from log file activity. If that's even possible with all the files on the same drive, it probably won't be very easy.
Really I can't think of any significant downsides. There is the possibility that if you want to use a storage-level snapshot technology in the future, the SAN may not support having the files in two different physical locations. Consult your SAN admins or vendor on this; it may not be applicable now necessarily, but might come into play in the future. This isn't a negative, but it may play into the setup strategy as a constraint/requirement.
Aside from that, it's just a bit of extra management to keep things in the right spot, and you have to make sure that any automation scripts you have also respects the difference in location by the type of file. But the latter is something you should be doing anyway when writing scripts, so I don't see that as a negative.
It may be prudent to separate tempdb specifically into another location as well.
