I just tested the setting in BSPlayer 1.36. I watched the first 4 minutes of "Stargate Atlantis - [01x01] - Rising" looking for smooth camera pans. Indeed the wait for vertical blank ensured there was no tearing. So I prefer it
ON. In theory this makes the time between 2 successive frames irregular, but since it is already impossible to make the display refresh exactly every n-th frame (n is integer), I prefer no tearing at the cost of slightly increased jerky playback.
There is a system component available which attempts to slave the audio clock to video whenever the display refresh rate is close to an even multiple of the FPS. I tried it but didn't like the way it influenced audio playback in general. It's good maybe for a dedicated cinema PC.
http://reclock.free.fr/