I hesitate to believe what I am told when there is no supporting data.  I have experimented a fair bit with dynamic and differencing disks in Virtual PC, Virtual Server and Hyper-V (Server 2008). 

Thanks to my Virtual Machine MVP colleagues for putting me on to this whitepaper which was only written a few weeks ago.

The data found in this white paper is extremely useful.  It also has links to MSDN to clarify some concepts and in certain cases, show scoped code to reinforce the points.  Very impressive!

http://download.microsoft.com/download/0/7/7/0778C0BB-5281-4390-92CD-EC138A18F2F9/WS08_R2_VHD_Performance_WhitePaper.docx

Read the complete post at http://owsug.ca/blogs/brad/archive/2010/03/15/Dynamic-VHD-format-vs.-Fixed-VHD-format-is-dramatically-improved-in-Server-2008-R2.aspx