Have you seen this Bonnie?
http://www.sql-server-performance.com/datatypes.asp

If the text data in a column varies greatly in length, use a VARCHAR data type instead of a CHAR data type. The amount of space saved by using VARCHAR over CHAR on variable length columns can greatly reduce I/O reads, improving overall SQL Server performance.

Another advantage of using VARCHAR over CHAR columns is that sorts performed on VARCHAR columns are generally faster than on CHAR columns. This is because the entire width of a CHAR column needs to be sorted. [6.5, 7.0, 2000] Updated 6-5-2003

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If a column's data does not vary widely in length, consider using a fixed-length CHAR field instead of a VARCHAR. While it may take up a little more space to store the data, processing fixed-length columns is faster in SQL Server than processing variable-length columns. [6.5, 7.0, 2000] Updated 8-4-2003