What are pros and cons of having dedicated application pools over keeping web applications in one default app pool?
If you have separate apppools then you pay a penalty in the initial load time of the first person to visit your site and spin back up the apppool after it recycles.
For example let's say overnight no-one hits your server, IIS will spin down (default 20mins I believe). The first person to visit the server will suffer a delay until the your application has been loaded back into memory.
Depending on how you deploy your site (e.g. release mode etc..) this will either not be a problem or could be annoying.
This is why we are looking into moving to a single apppool/server rather than 1 for each site.