From the Help file, Keyword - File Handling
You can move the temp recovery folder to a location other than the default;
Peter's more of the geek on this, but I'm going to go out on a limb and assume that since a scratch disk is not defined, than ID is using the OS swap or virtual paging file. If your looking to improve overall system performance, than a unique hdd, not a partition of the OS hdd is the way to go.
Peter hasn't actually played with this in terms of looking at performance, so he doesn't have much of an answer. I don't even know for sure if the recovery information is different from the undo information (though I suspect it has to be) and the undo stuff is probably what slows things down the most. Moving the recovery file can't hurt, though.