The extracted format is actually supposed to be faster unless you have a really slow HDD. the extracted format MIGHT take up just a LITTLE more disk space than a TRIMMED ("compressed") ISO image but not much (and a full sized 1:1 ISO image will still be the biggest) so really the multi-disk support is the only benefit with IOS's on DM(L).
I find that the extracted format is actually slower on a HDD (but faster on SD) to the point that it freezes if you go into a shop in Skies of Arcadia. Using DiscEx format (this was before you could use straight ISOs) fixed that.