There are no compatibility issues, VMI (paravirtualization) was always
an optimization, guests without VMI support still run fine on all VMware
products. The only caveat is that on older hardware (read without EPT or
RVI), VMI disabled guest will run a little slower compared to one which
has VMI enabled.

My post on LKML has some details about the performance impact. 
http://lkml.org/lkml/2009/9/17/466

-- 
Disable VMI from Ubuntu 10.04 32bit kernels.
https://bugs.launchpad.net/bugs/537601
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