of course if you have a large column you should use varchar(max)/nvarchar(max)/varbinary(max) as opposed to text/ntext/image. that wasn't the poster's question though.

they asked whether you should prefer varchar(int) compared with varchar(max) and the answer is, if you know the data is less than 4000/8000, then use varchar(int)

about using varchar(max) for parameter types to procs and functions, this post seems to indicate there are perf issues with using the max variant. I have never tried it as I would never bother with the max variants unless needed.

See Adam Machanic's post here:

http://www.simple-talk.com/community/forums/thread/1968.aspx