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Will it affect performance?

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up vote 5 down vote accepted

If you are planning to host .net application, yes Integrated Mode does helps. Integrated Mode is basically the pipeline which IIS 7 loads IIS and ASP.NET modules. The request-processing models of IIS and ASP.NET are integrated into a unified process model hence eliminates steps that were previously duplicated in IIS and ASP.NET, such as authentication. Additionally, Integrated mode enables the availability of managed features to all content types.

Check this article How to Take Advantage of the IIS 7.0 Integrated Pipeline and a very good blog Breaking Changes for ASP.NET 2.0 applications running in Integrated mode on IIS 7.0

Also have a look at Top 10 Performance Improvements in IIS 7.0

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