When should startup parameter -E be used?
The SQL Server Customer Advisory Team wrote a blog post that has some information on this setting here.

The –E startup flag
The SQL Server startup flag –E forces SQL Server to allocate 4 extents at a time to each file, essentially quadrupling the stripe size. In heavy insert scenarios, this drives larger block sizes to the disk. Also, your pages allocation will be more sequential with the same data file, allowing better sequential I/O for range and table scan operations (which are common in OLAP workloads).
This startup flag provides most, but not all, of the above mentioned benefits to I/O system – without the overhead of managing multiple filegroups. Be aware that this flag is supported only in 64-bit environments. You can find information about the –E startup flag in File allocation extension in SQL Server 2000 (64-bit) and SQL Server 2005 (KB329526).