>Is there any beneifit or disadvantage to indexing on varchar() vs char() that you are aware of?

There is a golden rule - smaller is better. The smaller the row, the more rows per page, the more data retrieved in a page I/O. The same holds for indexes. The smaller the key, the more keys per page, the more data retrieved in a page I/O. Also, there is incentive to keeping the size of the clustered key small since it becomes part of the key in non-clustered indexes.

-Mike