It will slow down your T1, but it depends on where the VPN is terminating. If the VPN is terminating on the router, it should not affect the LAN. The router would convert the regular packages over the LAN. If the VPN is going in through a server, then the processing overhead is required to do that conversion. So in that case, if you're using that server and you have all of those VPN connections going, then everything will slow down. That could cause access to the server to locally slow down.
In terms of the VPN, users coming in from the outside consume more bandwidth than a user not using a VPN. This is because there is encryption overhead added to every packet. Basically, all of the security and whatnot adds overhead, causing an increased use of bandwidth per second for that user. But it's one of the prices you pay to guarantee security in the trusted network. It's worth the investment of additional bandwidth to protect the network than to have no security and open access to all systems.
This was first published in July 2008