Are you seriously using 11 on production servers? We've yet to upgrade to SP3 of 10. 11 breaks a lot of things. Where did HA go? Replaced by some proprietary package.
HA was not replaced by a proprietary package at all. It was moved out of the default SLES install into an "add-on product" called SLES 11 HAE (HA Extension). It's still based on 100% open source components. Of course, it's an enterprise release and subscriptions are licensed separately. That's really the big difference, it's not included with SLES any longer. I believe this is the same model RHEL/RHCS uses. For what it's worth, she HAE actually one of the best improvements in SLES 11. Now based on OpenAIS instead of HeartBeat and is much more functional and configurable compared to SLES 10 HA (or Red Hat Cluster Suite for that matter). And I'll just add that RHEL still doesn't offer a supported DRBD implementation.
Will VMware tools work with the 11 kernel? Nope, sorry.
VMware tools work fine with the 11 kernel. I can't tell you how many SLES 11 images I have set up with both VMware Workstation or ESX, dozens at least, and I installed VMware-tools on all of them. I have seen an issue with some ESX 3.5 tool package builds. It doesn't happen in every case, if I recall, but when it does you'll see an error enabling the "paravirtualized scsi driver". One fix for this I know will work is to update your ESX to version 4. I believe this only happens with certain builds of 3.5.
We've yet to upgrade to SP3 of 10. 11 breaks a lot of things.
On the subject of stability, you shouldn't be waiting to update your SLES 10 to SP3. Many stability improvements in SP3. Honestly 11 seems pretty rock solid to me, but it's hard to tell since a lot of customers wait for the first SP to be released and tested a little before deploying to production.