The recommended best practice is to assign a SQL Server Transaction log file its' very own disk or LUN.
This is to avoid fragmentation of the transaction log file on disk, as other posters have mentioned, and to also avoid/minimise disk contention.
The ideal scenario is to have your DBA allocate sufficient log space for your database environment ahead of time i.e. to allocate say x GB of data in one go. On a dedicated disk this will create a contiguous allocation, thereby avoiding fragmentation.
If you need to grow your transaction log, again you should endeavour to do so in sizeable chunks in order to endeavour to allocate contiguously.
Editor, DotNetSpider MVM
Microsoft MVP 2014 [ASP.NET/IIS]