The IT department where I work is trying to move to 100% virtualized servers, with all the data stored on a SAN. They haven\'t done it yet, but the plan eventually calls for mo
Here's some VMWARE testing on it.. http://www.vmware.com/files/pdf/SQLServerWorkloads.pdf
Granted, they do not compare it to physical machines. But, you could probably do similar testing with the tools they used for your environment.
We currently run SQL Server 2005 in a VMWARE environment. BUT, it is a very lightly loaded database and it is great. Runs with no problems.
As most have pointed out, it will depend on your database load.
Maybe you can convince the IT Department to do some good testing before blindly implementing.