Dynamic drives are the slowest performing VHDs. Because it does allocate the space when it is created. space allocated as need and therefore, extra processor and disk accesses are made to allocate in smaller increments. because it is constantly requesting storage as it grows, dynamic vhd often become quite fragmented. So it has performance impact in terms of rotational latency. It is possible that a file might not be sequentially written on the storage due to the nature of dynamic disk, it may take more time to read it then it would take in a fixed disk.
If performance is not an issue then you can use dynamic disk. Most of time dynamic disk are used for testing and development purposes.
Regards,
Shahid