Defrag steam game files? Better performance?

I would like to know the answer as well.

Technically yes, but you probably won't notice it. It just gathers the files connected to the game to the same part of the disk or something like that.

Just get an SSD :)

https://en.wikipedia.org/wiki/Defragmentation

Some people say you won't notice the difference when you defragment. Sure if you only use your pc for the internet and as a glorified typemachine. However if you play games you will experience faster loading times and better performance. (Of course the difference depends on how badly fragmented your system was. :P)

First, some background: "Steam-integrated games are stored as single non-compressed archive files with the extension .gcf (an acronym for game cache file). Steam allocates space on the user's hard disk for .gcf files before downloading in order to reduce fragmentation which may occur when downloading large files and performing disk access. Game cache files help to make games more portable, stop users from accidentally overwriting important files, allow for easy modification of resources, and allows for validation of content for errors. For games that do not integrate, a "no cache file" system is provided. Here, a .ncf index file points to a directory of loose files somewhere else on the system."

That would make one assume that external defragmentation would have no effect for games stored in the .gcf format, but could possibly have an effect on games not stored in that format. The Steam defragger is supposed to take care of .gcf files, as mentioned in this thread, and an early test from way back in 2007 reported a significant performance boost after successful defragmentation. However, hardware and software have improved since, every setup/scenario is different, and as always, your mileage may vary.