I'm not sure : by VTF, you mean vertex texture format ? If so, I'm using it with geometry clipmaps. And yes, it speeds things up in the case of geometry clipmaps.
But you don't have "VTF" terrains. You can have <insert_terrain_algorithm_name_here> using vertex textures. The advantage of using vertex textures is that you can reuse the same static mesh over the whole terrain, simply changing the texture. But if you start to add LODs you'll have to take care of gaps between LODs, and you will need to update the vertex / index buffer (except if you can come up with a full vertex buffer based solution) and there's no point in using vertex texture.
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Also what about taking a mesh of say 17x17 or 33x33 and load that up as VBO and use the texture array extension to load up each 33x33 chunk of the terrain as a layer for the whole terrain? Then you would only have a VBO of 33x33 vertices and a small IBO for that mesh, and reuse it over and over again to render whatever size terrain you want?
This is the idea of the use of vertex texture. But if you do that without having a LOD scheme, you will probably be fillrate limited, and in this case, there's no point in using vertex textures. Except maybe simplicity of implementation.
