On hard disks, throughput and seeking is often faster towards the beginning of the disk, because that data is stored closer to the outer area of the disk, which has more sectors per cylinder. Thus, creating the swap at the beginning of the disk might improve performance.
For a 2.6 Linux kernel, there is no performance difference between a swap partition and an unfragmented swap file. When a swap partition/file is enabled by swapon, the 2.6 kernel finds which disk blocks the swapfile is stored on, so that when it comes time to swap, it doesn't have to deal with the filesystem at all.
Thus, if the swapfile isn't fragmented, it's exactly as if there were a swap partition at its same location. Or put another way, you'd get identical performance if you used a swap partition raw, or formatted it with a filesystem and then created a swapfile that filled all space, since either way on that disk there is a contiguous region used for swapping, which the kernel uses directly.
So if one creates the swapfile when the filesystem is fresh (thus ensuring it's not fragmented and at the beginning of the volume), performance should be identical to having a swap partition just before the volume. Further, if one created the swapfile say in the middle of the volume, with files on either side, one might get better performance, since there's less seeking to swap.
On Linux, if the swapfile is created unfragmented, and never expanded, it cannot become fragmented, at least with normal filesystems like ext3/4. It will always use the same disk blocks, which are contiguous.
I conclude that about the only benefit of a dedicated swap partition is guaranteed unfragmentation when you need to expand it; if your swap will never be expanded, a file created on a fresh filesystem doesn't require an extra partition.
If you run out of physical memory, you use virtual memory, which stores the data in memory on disk. Reading from disk is several orders of magnitude slower than reading from memory, so this slows everything way down. (Exchanging data between real memory and virtual memory is "swapping". The space on disk is "swap space".)
If your app is "using swap", then you either need to use less memory or buy more RAM.
(Swap is useful because applications that aren't being used can be stored on disk until they are used. Then they can be "paged in" and run normally again. While it is not in memory, though, the OS can use that memory for something else, like disk cache. So it's a very useful feature, but if you don't have enough physical memory to run your program, you definitely need more memory. Fortunately, memory is really really cheap these days.)
Best Answer
This sounds like you are on a virtualized host based on openvz.
The "audit_log_user_command" error is common from a few version of openvz/virtuozzo that didn't patch a kernel bug that echo'd that out to the screen.
In this case, you cannot create swap, you are only allocated a certain amount of system memory. After you exceed this, you will be unable to allocate memory and get OOM kills depending on how frequently you attempt to spawn new processes near the barrier.