Hi there,
At risk of causing a holy war, I think it depends is the answer.
While it is true that by using a HDD you are wasting a lot of space, added cost plus there is the consideration of actually running the spinning rust (SSD?) however it is often easier to protect these with RAID1. Very few servers come with truly redundant options for either USB or SD cards (HPE does have a pseudo redundant Micro-SD option in a USB header but the constant alerts about latency drive you nuts or maybe that is just me).
When you are talking about a remote data centre, then having to visit to bring a host online because a SD/USB card has failed doesn't appeal. Yes I know you have to go and replace the failed drive but this is often much less disruptive than when using SD/USB inside the blade/server.
The other thing is that booting from HDD is much faster. Subject again and really not much of an issue unless you are waiting for the server to start - BIOS normally kills you with these servers and probably why QuickBoot has come about. Having ESXi boot faster would not swing me to purchasing HDD but is a nice side effect.
Like I said this is probably highly subjective but works for us. As people have already pointed out the negative with installing on a HDD is the cost of the HDD, plus the waste of space and additional heat/power required.
We use a combination of the two depending on the distance the server is from us, i.e. we have some very remote branches and trusting remote hands to open a server to replace internal parts without breaking something else is a risk we are not willing to take. Much easier to have them slot a drive into the front of the server when it fails.
Hope these helps and I am well aware that I would be in the minority with using ESXi on local drive