Hello,
At our shop we are currently running vmWare (vSphere 4 Essentials). The server is currently hosting 3 virtual machines, 1 GIS Development, 1 GIS production @10.0 and another GIS production machine @ 10.1 (still in the process of migration). The production GIS servers are both running ArcGIS Server 10.X with SQL Server and SDE. I really like this set up mainly b/c it provides me with more machines than I would ever get if we had to physical boxes. Performance has been really good so far.
hope it helps.