Varchar is a single-byte character and nvarchar is a double-byte character.
The obvious point that the same text takes up twice as much space in the database as nvarchar - because the unicode character set uses 2 bytes per character. So unless you need funny characters it is better to use varchar. This is not just because of database space - obviously all data being pulled back to the client is doubled up too - so 100 chars of varchar = about 100 bytes but it would be 200 bytes for nvarchar doubling network loads.
It deals with the performance hit you can get when SQL Server implicitly converts your data to nchar and nvarchar for you when you have enabled Unicode support in your data sources.
If you are selecting against a char or varchar column in your database with a Unicode value in an nchar or nvarchar variable, it uses Clustered Index Scan in execution plan since every value in the table must be converted before it can be compared.
While varchar uses Clustered Index seek.