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
SAN - of course, and clustering, but regarding Virtualization - you will take a Performance Hit (may or may not be worth it to you):
http://blogs.technet.com/andrew/archive/2008/05/07/virtualized-sql-server.aspx
http://sswug.org has had some notes about it in their daily newsletter lately
We are running a payroll system for 900+ people on VMWare with no problems. This has been in production for 10 months. It's a medium sized load as far as DB goes, and we pre-allocated drive space in VM to prevent IO issues. You have to defrag both the VM Host and the VM slice on a regular basis in order to maintain acceptable performance.