Fibre Channel to Software iSCSI Failover Failures: "Based on these results, I’m inclined to say that one of two things is true. Either: I did something very, very wrong; or ESX isn’t quite right to support automatic failover between FC and software iSCSI. Has anyone else tried this, or am I the only one? If you have tried it, did it work? If so, what steps did you have to take—if any—to make it work properly?"
Are you using a NetApp for the SAN or something else? I've been able to do this quite happily using Datacore's SANMelody storage virtualisation product. While I didn't test it under high stress loads, it worked just fine under regular production loads of 10-15 VMs running.
In my configuration I allocated the iSCSI Initiators and the FC WWNs to the same ESX Server object in the interface and it seemed to be fine with that.
Edited to add: Side note - I did these tests a while ago using ESX 3.0.1. I haven't tested this against ESX 3.5.
Edited to add: Boy, re-reading my comment about FC WWNs made me realize just how easy it is to Good Morning Vietnam acronym speak. That made sense to what, about 1% of the population?