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
I would think that the possibility of something bad happening to the data would be too great.
As a dead simple example, let's say you ran a SQL Server box in Virtual Server 2005 R2 and undo disks were turned on (so, the main "disk" file stays the same and all changes are made to a separate file which can be purged or merged later). Then something happens (usually, you run into the 128GB limit or whatever the size is) and some middle of the night clueless admin has to reboot and figures out he can't do so until he removes the undo disks. You're screwed - even if he keeps the undo disk files for later analysis the possibilities of merging the data together is pretty slim.
So echoing the other posts in this thread - for development it's great but for production it's not a good idea. Your code can be rebuilt and redeployed (that's another thing, VM's for source control aren't a good idea either) but your live production data is way more important.