First, this is really not a Fibre Channel vs. IP protocol debate. It is really an NFS vs. VMFS debate. Actually, it is not even an NFS vs. VMFS debate. NFS is just a transfer protocol. This is really a VMFS vs. the file system of the chosen NAS debate. Each NAS manufacturer -- EMC Corp. (NYSE: EMC), NetApp Inc. (Nasdaq: NTAP), ONStor Inc. -- has its own file system, and the merits of that file system should be compared against VMFS. That said, there are some general capabilities that most of these suppliers bring to the table because of the sharing nature of a NAS.
VMFS is the file system that VMware provides on block-based systems to host virtual machine images, a file system that is sharable and clusterable on a SAN. That is no small feat, but as file systems go it has its limitations, and those limitations can be nicely answered by NFS. NFS and the NAS that utilizes it are by their nature a sharing-based device. VMDKs are essentially files, so it is not a great leap to propose that something designed to serve files might be well suited to the task.
Where VMware on NFS shines is in day-to-day operations. It is by far the easiest environment to live with. Creating and provisioning a VMware Datastore and configuring for VMotion using a NFS mounted service is simple. Resizing those stores, both larger and smaller, is just as easy and requires no service interruption with the virtual machines. In contrast, when using VMFS most VMware administrators will stop their virtual machines prior to attempting a datastore or even VMDK expansion just to be safe. Shrinking a datastore no matter how many precautions you take can cause big problems and is generally not advised.
The fact is that NFS is an IP-based protocol and not even an IP-based storage protocol. So that greatly simplifies operations and reduces cost. Planning however cannot be thrown to the wind. If performance problems develop, the complexity required to scale out an IP infrastructure begins to rival the alleged complexity of Fibre Channel.