X-bit Labs has written a roundup of 2.5" SAS hard disks, you can read it over here.
Indeed, if our priority is the number of input-output operations per second rather than the storage capacity, it makes sense to replace physically larger HDDs with smaller ones. For example, you can install six 2.5-inch drives into a 1U server instead of four 3.5-inch ones – an advantage of two spindles! The only question is whether the smaller HDDs have high speed characteristics. Of course, they are going to have lower sequential speeds, but what about the number of disk operations per second?