Actually, I'd probably go with my own variant (see above), which happens to be faster than either of these.

Yours isn't the fastest for me, although I've added use warnings, use strict; and forced a scalar context unto the substitution:

#!/usr/bin/perl

use strict;
use warnings;

use Benchmark qw(cmpthese);

my $test_text = q|Wow, that was quick!<br/>
Two points:<br/>
1) I only  want space, not tabs or new lines - so shouldn't the \s be 
+  replaced with " "? <br/>
2) Is there  a difference between inkgmi's and GrandFather's entry? <b
+r/>
PS I thought executed regexs are experimental (so says the man page) -
+ is there a problem   with them?<br/>
|;
[download]

cmpthese(-3, {
    GrandFather => sub {
       local $_ = $test_text;
       scalar s/ ( +)/" " . (" " x length ($1))/ge
    },

    ikegami => sub {
       local $_ = $test_text;
       scalar s/(?<= )( +)/'&nbsp;' x length($1)/eg
    },

    Smylers => sub {
       local $_ = $test_text;
       scalar s/(?<= )( )/&nbsp;/g
    },
});

__END__
               Rate     ikegami     Smylers GrandFather
ikegami     22180/s          --        -25%        -31%
Smylers     29772/s         34%          --         -8%
GrandFather 32268/s         45%          8%          --
[download]