Blade severs should only be considered when you have space, power, or cooling constraints. They are more expensive and create their own specific issues like you said.
As far as scaling up vs scaling out in a VM cluster. I prefer more smaller nodes over fewer larger nodes. In a two node VM cluster you can't exceed 50% of any resource unless you are willing to deal with oversubscribed resources during a node failure. Well that isn't a very efficient use of equipment. As you add nodes there you can increase the usable percentage of a resources.