Hey, I just had this problem myself, so I looked at the system logs while I tried to set it -- the actual error it was throwing was "directory must exist and be accessible".
I was trying to set it to [DS1] /syslogs --- so I just logged onto the host and went to /vmfs/volumes/DS1 and did a mkdir syslogs. After that, it accepted the value just fine.
If you're not going to use the "unique log dir" directive, you may have to make each host folder manually, but at least it seems to be workable!
Hopefully this helps, I just happened to see this as I was having the same problem! Good luck!