This is a difficult question.. It needs to be complimented by what you want to achieve.
From my own experience.. not quoting from any body else. but what i have done with my on time, equipment I can tell you this. I used new and/or fully functional equipment.
If a machine needs to boot once a few months- then yea 2.5" will be ok, put more ram in the machine and make it use more memory instead of grinding the HDD. Using a 2.5" for multiple boots does get slower once the disk get fuller and more fragmented, I used a 2.5" on a media centre- because it was a small disk and i could just pop in on top of my raid... but after 8 months I just put a 80GB 3.5" because the boot time was annoying me heavily. I did not believe that should have made a difference.. but it has!
If you going need to make mass storage , I am talking about like massive raids.. 4-8 drives per array, then the benefit of using 2.5" is that they use far less power during spin up, are much more silent, and take up allot less space. If you got them in raid 5, replacing a drive is easy peasy, and maximise the STORAGE amount.. but performance is less (not saying its rubbish.. but it does not always get to full potential. especially over time)
On major difference in 2.5" to 3.5" is DOLLAR per MB, 3.5" are available in 3TB drives.. the largest 2,5" is 1TB.. and the price difference is shocking. (as of Nov 2011)
@Luke404 - Thanks for pointing out to us that Enterprise 2.5" 15000RPM drives
do exist. And yes they do, the reason I never came across one.. Price tag.
The other consideration is how many times you going to write to these drives?
Me, I set up a 4 drive array using RAID5.. and i dont care about MAX performance because i save massive chunks of data.. and that is it- I need to read maybe once year, but usually get deleted when it gets obsolete.
You want to use fast drives for operating systems that will be doing a bit of hard work, or SQL server, webserver, some sort of uPNP, etc.. then 2.5" just don't cut it here, you need to get 15000RPM drives like Raptors that are twice as fast in responding than a normal 3.5"
But that said.. the era of Solid State is flooding datacenteres and servers that really on reading the same data more than writing it.
SSD's are amazingly fast at reading data- I was impressed at how fast my Windows 7 loaded after I installed.. but at the time (Early 2010) the small chunk write speed, made me scream and run around with scissors. Today the same SSD, at version 3 is extermly improved at writing and could be possibly ok to use a system drive. I how ever change my config and used this to install my games to, which was ideal, because you install a game once and read it many times.. I used Stalker for benchmarking, and of a Raptor 15K it was faster in loading levels but still like 30-70seconds, but from the SSD, it was a few seconds.. i could not believe it.. I could tweak up the graphics and it ran like a monster.
So there is an independent report- I tried not to be biased or to stick to standard.. so please dont down vote me if i made an error-- I just wanted to share my personal experience from years of tinkering..