SQL Server has no problems going virtual, and in fact Microsoft has told me 2008 can push 90% performance with Hyper-V. The issues is that SQL makes a lot of IO transactions in SharePoint. Its these IO transactions which virtualisation supports poorly and causes reduced performance in a virtual farm. But 2010 is the target date, I have heard we will have a full virtual farm at all levels in 2010 release.
Lets only hope.
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