Does varchar result in performance hit due to data fragmentation?

You make a lot of assumptions in your question that aren't necessarily true.

The type of the a column in any DBMS tells you nothing at all about the nature of the storage of that data unless the documentation clearly tells you how the data is stored. IF that's not stated, you don't know how it is stored and the DBMS is free to change the storage mechanism from release to release.

In fact some databases store CHAR fields internally as VARCHAR, while others make a decision about how to the store the column based on the declared size of the column. Some database store VARCHAR with the other columns, some with BLOB data, and some implement other storage, Some databases always rewrite the entire row when a column is updated, others don't. Some pad VARCHARs to allow for limited future updating without relocating the storage.

The DBMS is responsible for figuring out how to store the data and return it to you in a speedy and consistent fashion. It always amazes me how many people to try out think the database, generally in advance of detecting any performance problem.

The data structures used inside a database engine is far more complex than you are giving it credit for! Yes, there are issues of fragmentation and issues where updating a varchar with a large value can cause a performance hit, however its difficult to explain /understand what the implications of those issues are without a fuller understanding of the datastructures involved.

For MS Sql server you might want to start with understanding pages - the fundamental unit of storage (see http://msdn.microsoft.com/en-us/library/ms190969.aspx)

In terms of the performance implications of fixes vs variable storage types on performance there are a number of points to consider:

• Using variable length columns can improve performance as it allows more rows to fit on a single page, meaning fewer reads
• Using variable length columns requires special offset values, and the maintenance of these values requires a slight overhead, however this extra overhead is generally neglible.
• Another potential cost is the cost of increasing the size of a column when the page containing that row is nearly full

As you can see, the situation is rather complex - generally speaking however you can trust the database engine to be pretty good at dealing with variable data types and they should be the data type of choice when there may be a significant variance of the length of data held in a column.

At this point I'm also going to recommend the excellent book "Microsoft Sql Server 2008 Internals" for some more insight into how complex things like this really get!

The answer will depend on the specific DBMS. For Oracle, it is certainly possible to end up with fragmentation in the form of "chained rows", and that incurs a performance penalty. However, you can mitigate against that by pre-allocating some empty space in the table blocks to allow for some expansion due to updates. However, CHAR columns will typically make the table much bigger, which has its own impact on performance. CHAR also has other issues such as blank-padded comparisons which mean that, in Oracle, use of the CHAR datatype is almost never a good idea.