I would like to know which of the following would work better:
1) 4 LUNs on the same raid 5 array with 7 disks (i.e. shareing the same disks)
2) 4 LUNs on RAID 0+1 with 2 disks (i.e. separate disks)
Depends. With 4 LUNs on the same 7 disks a VM could get the full use of all 7 if the other VMs are idle...so you spread the performance around. With the RAID 0+1 setups you'd have guaranteed performance on each LUN, but it can't be as fast as the RAID 5.