Usually increasing the 5 minutes statistic is the one with most impact over the DB size/performance. If you have 1000 VMs / 50 ESX, this really may start impacting on the amount of data processed by the engine. Never saw/tried levels 3 and 4 in production environments.
A good example of need to increase this levels are when you have vCenter Chargeback, that needs to analyze disk statitics in order to be able to calculate some reports. Level 2 are ok for that, but the defaults to 1 will not allow this to happen, etc.