All depends on you use. For most Cramming all your files into a pile on your OS disk will increase fragmentation quickly and things like log files cannot grow as is, and fill quickly fragment.
However, if your Adding to your drive LARGE files, then have big continuous free disk is good to not fragment them.
Also if your doing things like Partition/Filesystem, or even Virtual Disc Re-Sizing, then u will want all your data crammed into one pile as tight as possible