A VMM beta customer recently asked about consolidating 3 physical SQL servers that are not fully using server resources as VMs onto one host to save rack space and up the resource use efficiency.

Microsoft has a March 2007 white paper on virtualizing SQL Server with some good guidance on virtualizing your SQL servers at http://www.microsoft.com/sql/techinfo/whitepapers/virtenviron.mspx, inlcuding advice on licensing costs - which sometimes gets overlooked in the planning stage by the data center guys.

You should read the entire paper (only 7 pages) because the conlusions are based on the assumptions laid out there, but, for those of you - like me- who are time-challenged, here's the Conclusion:

"Conclusion
Running SQL Server 2005 in a virtual environment has numerous benefits. Virtual environments can effectively consolidate servers so that the number of total servers needed by an organization is minimized. Virtualization also enables legacy applications and databases to run in a technologically current environment and can save floor space and power expenses.
If your organization is considering virtualizing SQL Server 2005, Enterprise Edition has licensing advantages over the Standard and Workgroup editions when you license all available physical processors. If all available physical processors are licensed, Enterprise Edition does not require additional SQL Server 2005 licenses for virtual machines.
While virtualization has many benefits, it is not the right solution for every case. For very high throughput applications and database applications that must be highly scalable, virtualization may not be the best choice. In these scenarios, running multiple instances of SQL Server 2005 would be a better choice."