The main points are:
- 3.5″ hard drives are usually larger in capacity due to the size.
- 3.5″ drives are no more reliable then 2.5″.
- 2.5″ drives generally consume less power.
- 2.5″ occupy less space. You can pack more drives into a drive enclosure using 2.5″ then 3.5″ (Useful for servers)
When choosing which one to use it may come down to budget. 3.5″ are usually cheaper per gb.
Fun fact: 2.5″ hard drives became popular after 2007 in laptops when they were released in 1TB size. Prairie Tek released the 220 in 1988. It was the first 2.5″ hard drive designed for notebook market. It uses two platters to store 20mb.