Actually it is more for performance, we have an 'old' vm at the moment 4 cpu 64gb ram etc. and want to upgrade to Ent edition and many more cpu's so move to hyper-v 2012 but am thinking if for performance we went 'back' to physical would that be faster than virtual with a dedicated host when we add another 200 users to our application
Microsoft has published whitepapers describing performance tuning for both environments.
You might also want to look at some of the appliance type offerings.
Out of the box, they are pretty well architected for performance.
Part of the overall picture includes additional load of 200 users - no indication of how many you have today.
And if it is just SQL Server, or SSRS, SSAS, etc.
Enterprise also offers some features that can enhance performance.
Be sure to consider licensing implications, especially if also going to a newer version of SQL Server.
Database design can have great impacts on performance.
Virtual vs. Physical - assuming both are done correctly - is not the main determination of speed.
Understand why and how much hardware you need.
It is very easy to spend a lot of money on hardware, and in the end be disappointed.
I used to have to justify even adding memory to a server.
And on server upgrades, had to justify, not assume, how much more hardware I needed.
Sounds like quite a different environment than yours.