Storage and backup considerations using kvm on Cent OS 6.0
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IMHO, the easiest way is by using tools like "dd" to create the whole disk image of your SCO installation and use that image for your guest disk. CloneZilla, a live Linux CD, could automate such work.
Regarding backups, it's up to you. Many people use "tar", but lately rsync is a popular choice too. Full image backup is a safe choice, but that takes really big space, especially if you don't compress it.
There are benchmarks showing very little difference in terms of i/o performance between a lv backed virtual disk and a image file backed virtual disk. I expect the file system used will be a factor, as will fragmentation. Google for the benchmarks.
If you decide to use an image file, I would use a fixed sized image rather than a dynamically growing one to prevent over committing your disk space in the future.
Is performance faster using LVM than image file in the host filesystem ?
I have no data in hand, so the following idea is entirely based on my guess:
just like Phil said, I think it's about the same (LVM based vs image file based). The key here I believe is more on which filesystem you use, both the one you use to format image file and the one that act as a host (in case of image file).
One thing that might speed up the access is that try to use extent based filesystem whenever possible, such as ext4 or JFS. Extent is a nice way to reduce fragmentation, reading as many as you can in one go.