I'm really excited about virtualization and think it's the best way to streamline deployments and get the most bang for buck out of your hardware. However, there are some important differences between virtual and physical environments that you need to be mindful of. I was hoping to get my virtualization guidance out in conjunction with MSFT's updated guidance, but I'm really under water right now and haven't had time to do the needed testing. Still, if you plan to deploy a production farm on virtual servers, make sure you follow the principles outlined in the following article: http://technet.microsoft.com/en-us/library/cc816955.aspx

Something else of note is that HW vendors are beginning to optimize their hardware for virtualization. Just check out this fact sheet about HP's BL 495c: http://www.hp.com/hpinfo/newsroom/press_kits/2008/virtualization/docs/fs_proliant.pdf