From LedHed's Wiki
NTFS creates a short filename for each file in the MFT (Master File Table). Eliminating the short names saves CPU and I/O resources and can have a significant impact on performance (according to Micro$oft).
To disable short file names:
fsutil behavior set disable8dot3 1
This will prevent new files from having short names created, but what about existing files?
To strip off short names from existing files:
fsutil 8dot3name strip
References
http://technet.microsoft.com/en-us/library/ff633453%28WS.10%29.aspx