Yes, HD speed makes the world of difference. Even on a system without VM, it makes the whole system feel more responsive. In a world of steadily increasing code size, any interface that uses CPU time to poll it is dead, dead, dead - and with good reason.
As to SCSI vs IDE, it's pretty established that modern SCSI is better in almost every way than modern IDE. The actual interfaces don't have much difference, although SCSI has a slight technical advantage still (although transfers use no CPU time on SCSI or UDMA-IDE, drive commands still do on IDE. SCSI is also better with multiple devices).
What's more important to remember is that SCSI drives are built to server specs and have far better components and technology than IDE drives, which are generally only built to desktop specs. The only IDE drive which could claim to come close to server level is the Western Digital Raptor, and it falls quite seriously short of the big boys at the top.
