VMDKs vs LUNs

I would like to get some practical feed back on pros and cons of VMDKs vs LUNs.

I see two possible (well three but the third is well disucussed) ways to divide up my SAN storage for presentation to vSphere.

1. I create my SAN vDisks and LUNs with each LUN sized to represent what would be the individual datastores/drives for each VM in vSphere and then basically fill that LUN with a single VMDK file.
2. I create my SAN vDisks and just one LUN per vDisk and then create mutiple VMDK files within that LUN for each individual datastore/drive for each VM in vSphere.
3. Would be #1 but the RDM vs VMDK which has already been thoughly discussed.

My initial reaction is option #2, keep the vDisks and LUNs on the SAN large and then subdivide and present to the VMs using VMDK files. With limited background wanted to get feedback from other users with a bit more experience and insight.

Thanks,

--Marshall