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Could you please shed some light on that?

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where have you seen this mentioned? This hardly constitutes a question – Nick Kavadias Feb 26 '10 at 9:09
up vote 1 down vote accepted

It all depends on the scale of your application.

Whether you are going virtual or bare metal, it is all about proper planning.

I have seen several white papers and articles discussing databases (and specifically MS SQL) and how to plan for deploying in a virtual environment.

The biggest issue on the VPS side is going to be, how much do you know about the infrastructure and hardware that you are running on. Even if you have multiple "disks" they could actually be stored on the same physical drives or they may be on a high speed SAN with a ton of spindles, you just don't know.

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The problem with MSSQL is that it can be quite memory hungry ( dependant on what you are doing with it), often VPS's come with a limited amount of memory, and so don't perform well when running MSSQL. If your VPS has enough memory to do what you want to do with SQL then there really is not reason why is can't run on their. I have run MSSQL on a number of VPS's and Virtual Machines with no problems at all.

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I use SQL Server Express on my VPS... no problems of any sort at all...

Without specific 'accusations' to rebut, there is no a lot more else I can say.

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I've head SQL Server can optimize the data location on the disk plates to make the database faster, it reduce the needs of head move, and this is not possible on virtual disks and on complex RAID levels (RAID 1 is the best for that).

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As ManiacZX said, it all depend on the scale of the project. If you are talking of several hundreds requests per minutes, go dedicated. Otherwise VPS should be fine.

The real difference is within the allocation of ressources.
On a dedicated server, all ressources are dedicated to your SQL server.
On a VPS, unless you pay more, you only have dedicated RAM (most of the times).

CPU and Disk I/O is shared and limited per VPS, you most likely can't use all CPU and Disk I/O.

To make it short, VPS is probably fine. For business critical applicaton, aim for a dedicated environment and ressources.

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