I think matching cluster sizes solved the issue.
I created another DD Disk (64K, made large VMware 5 datastore, spanning a few 2TB VMDK files)
I formatted that guest parition using 64k and I am seeing some good results so far.

I experience this issue too with SPdata being way to big, even on the initial copy of files to it (nothing is being moved around) Could it be because of a cluster size mismatch between VMGuest/iSCSIFS/spdata iSCSI native disk partition formatted (where spdata resides): Bytes Per Cluster : 65536 VMwa...