Everything has its tradeoffs. An iSCSI SAN should not share a network with regular network traffic. The data transfer...
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takes up too much network bandwidth and it will impact application performance. So, there is some upfront investment in networking equipment. SMBs typically have small IT groups, so you have the pain and agony of adding yet another IT project to a group that is probably close to maxed out.
There is some minimal CPU overhead in packetizing the SCSI blocks and you've got some TCP/IP overhead, but if it's configured correctly, the overhead, packetizing and network latency should be transparent to end users. In fact, ESG recently did some research and found that 87% of early iSCSI adopters were satisfied with their iSCSI application performance. Seeing that satisfaction rate among current iSCSI end-users should help dispel the performance concerns of any potential customers.
However, there is one notable exception that has to be considered with iSCSI performance, particularly with backup. Backup is bandwidth intensive, so you should look at that separately. It is typically bandwidth intensive and single threaded, so system administrators should evaluate the impact on network performance compared to a Fibre Channel, SAN and iSCSI.
Check out the entire iSCSI SAN FAQ.