With vSphere 4.0 update 1, PVSCSI adapter can be used for boot disks of virtual machines and it is supported for Windows 2003 & 2008 guest OS. Since Windows doesn't have drivers for this SCSI adapter, you will get "Setup did not find any Hard Drive Installed on your computer" error during installation.
The following floppy images are available - pvscsi-18.104.22.168-signed-Windows2003.flp, pvscsi-22.214.171.124-signed-Windows2008.flp & vmscsi-126.96.36.199-signed.flp in /vmimages/floppies of ESX host
Edit the virtual machine floppy settings. From the floppy options, select use floppy image and browse to the vmimages/floppies/pvscsi-188.8.131.52-signed-Windows200x.flp. Do not connect it now (doing so may result in a blank screen in the console, when the VM is powered on)
During the Windows OS installation, press F6 and connect the floppy now from settings. Press S & PVSCSI driver should appear. Press Enter to continue.
For using PVSCSI in ESXi, please refer to this community post - http://communities.vmware.com/thread/243972?tstart=0
Please refer to this VMware KB on how to configure disks with PVSCSI - http://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=1010398
Update: Good information on why PVSCSI doesn't improve performance in few cases - http://communities.vmware.com/thread/213313