I have done som testing with ESXI and Synology RS407 (a old NAS).
In the RS407 the ISCSI performance is to low on writes, it cant be used for storage for ESXI.
Next time we need low-end storage we will most likley try the new RS810 (with extra memory), it will be intresting to see the performance compared to our mid-range disk arrays.
We will use NFS and not ISCSI between ESXI and Synology for the following reasons:
Only one volume for all VM that will use the synology storage, with ISCSI you get several 1TB* LUNs where you can place your VM:s
You can use VMFS extent to group LUNs to bigger disks but we only use that to make smaller LUNs to 1TB LUNs (see argument 3 below)
*A LUN in ESXI 3.5 can be max 2TB
With one big volumes over NFS your disk "waste" will be smaller then with 1-2TB LUNS.
Ex: a 6TB NFS volume (4x2TB disk) or 6 ISCSI volumes at 1TB, you will not be able to use every byte of the LUN.
With one volume you will only lose once, with 6 volumes you .....
3.Allocation of VM
With NFS every VM gets its own "handle" to its files on the NFS server, the NFS server handles the coordination between diffrent VM files.
High-end diskarrays manufactures like Netapp are primaiy used as advanced NFS servers,they have support for ISCSI but NFS are better.
With ISCSI you have to consider size of LUN and number of VM per LUN to avoid "disklocks"
NFS have in my testing with RS407 better performance.
Dont forget to make your volume "asynchronius = YES" in "NFS privileges" (requires DSM 3.0)
But thats only my opinion