Scale-up and scale-out clusters have their advantages and disadvantages.
The primary advantage of a scale-up cluster is that it takes less effort to manage and monitor; thus, it is less expensive (in terms of operational cost). When it comes to the other infrastructure components, such as power, cooling, and space, this cluster is also beneficial as it might consume less than a scale-out cluster. If you choose to virtualize user desktops, then a scale-up cluster is preferable.
However, a scale-up cluster has disadvantages as well. Consider a failure domain of a scale-up cluster. A single host failure in a scale-up cluster can affect many VMs at the same time. vSphere HA will need to restart those failed VMs. Also, the reservation of failover capacity is also huge, as reserving a single host also impacts cluster resource reservation.
DRS migration options are very limited in a scale-up cluster. This may result in workloads that are not balanced perfectly between all the hosts.
You may need to consider the HA maximum VM limit as well. In a scale-up cluster, you may end up reaching that limit very fast (8,000 VMs per cluster in vSphere 6.5); then HA will not be able to restart those VMs after a failure.
Similarly, a scale-out cluster also has several advantages and disadvantages. As opposed to the scale-up cluster, only fewer VMs are affected in a scale-out cluster due to a single host failure, and the failover takes effect quickly as well. Also, fewer resources will be reserved for the failover.
With DRS enabled, a scale-out cluster has the option to provide more choices to VMs, in terms of migration and load balancing. Also, it is hard to reach the per-host VM limits in a scale-out cluster.
However, it can consume more power, cooling, and floor space. For example, four-socket servers take 2U-4U of space in the rack, whereas two-socket servers take 1U-2U of space in the rack. Additional cost could be related to the network port. Operational complexity and costs are also high in the case of a scale-out cluster.