I have a question. if we pass parameters say some 8 parameters to a template (of which few are xml requests each say 4 kb) will there be performance set back?

also we used function calls instead of call-template and we are able to see some better performance. Is this true under all circumstances?

>if we pass parameters say some 8 parameters to a template

The answers to questions like this are likely to vary from one XSLT processor to another. I would recommend asking them on the support forum for the particular product you are interested in.

Michael Kay
http://www.saxonica.com/
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference