best practice for SQL connection string?

My IIS7 ASP.NET website is hosted on the same Win 2008 server as my SQL 2008 R2 database.

My web applications have my SQL connection string in the web.config file.  It looks like this:

connectionString="Data Source=mydomain.com.....

Would connections speed up if I did something like DataSource = Localhost or the private-side IP, or something like that?   Is what Im doing the best practice?  I favor browsing speed for the end user (web visitor) above all else
arthurh88Asked:
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Aaron TomoskyDirector of Solutions ConsultingCommented:
I always use localhost mainly because it makes it easy to copy from dev to staging to production. It makes it technically faster because there is no DNS lookup but I don't think you would notice as its cached after the first time.
SJCFL-AdminCommented:
From my perspective, this is best practice in terms of scalability:

Plan on ultimately having seperate application and SQL servers

Use DNS because eventually you will may need to change physical configuration and ultimately this will cause least interruption to your users
Easwaran ParamasivamCommented:
Please do not use Localhost. This is bad practise.

Use ServerName exactly. Even IP leads to confusion sometimes.

Better store encrypted string in web.config file where you can decrypt in application for security purpose.

http://www.codeproject.com/Tips/304638/Encrypt-or-Decrypt-Connection-Strings-in-web-confi
http://chiragrdarji.wordpress.com/2008/08/11/how-to-encrypt-connection-string-in-webconfig/
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Aaron TomoskyDirector of Solutions ConsultingCommented:
The reason I use localhost is because the only thing that talks to my db is a small app that has all the web services. It always lives on the db server. My actual front end applications don't have connection strings to the database.

I suppose if you have everything as one big application it would be bad practice to do it this way, but then I would consider it bad practice to have one big application ;)

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SJCFL-AdminCommented:
You are one step ahead of me and I salute you ! :-)
arthurh88Author Commented:
why is local host a bad practice?  can someone explain that please?
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Windows Server 2008

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