Pros/Cons of Virtualization

On the down side

Performace can be an issue. The more virtual machines that you have all trying to use the same hardware then the more this becomes an issue.

Of course another issue is hardware failure - if that happens then all the Virtual machines on that hardware go down.

You dont have the problems with hardware failure if you use the enterprise ESX Server - just setup two machines with instant failover... you can even cluster them for performance gains so the failover machines resources are not being wasted.  It depends on the workload of your servers, most the time many servers sit under 5% utilization.. This is when VMWare becomes very cost effective... If you had a server that already was well specced, and ran over 80% utilization, you can still use VMware, but only on dedicated hardware... you still get the benefits of snapshots (to test patches etc) and failover/portability.

Have to say, I've been using VMWare and Virtual Server for a number of different reasons over the past few years and I love it. However I'm still very much in favour of putting more critical services on actual hardware for performance and supportability/management reasons mainly (In virtual server at least, you can't use WOL for the virtual NICs and you can't use RILOS/ILOS functionality).
"Performance - generally most of my VM's run faster than if they were loaded on dedicated hardware" - This is impossible unless you have really badly configured hardware! As soon as you start virtualising anything you are going to take a performance hit, the virtual hard disk is just a file on the actual harddisk, how can it possibly give better performance than an actual RAID5 SCSI configuration for example? Remember, there still has to be hardware underneath it, it still has to write to disk, it's not a magical virtual solution which bypasses hardware altogether. ;-)
Just my 2d. :)

Hmm I know it might only be perception - but it does seem to go faster.. especially booting... dont ask me why - maybe the drivers/hardware base is more efficient... I dunno..  Will see how our new beefy server goes when its loaded with Vmware ESX server with 4-6 VMware production vmware sessions going on it.. From the case studies I've seen, it should be no problem at all

Agreed, shouldn't be a problem and it is a fantastic solution for many applications. Most of my test rigs were virtualised with the odd bit of hardware here and there to support the limitations of VM (networking can be a headache when you're testing advanced power management software for example, well, it just doesn't work). I can see how booting a VM may be faster seen as the hardware which the VM is ultimately running on has already been initialised by the host OS. Might be interesting to run up perfmon on both and see what the differences are, I'm pretty sure you will see a big difference in disk latency which would show up more profoundly with heavy disk usage such as a regularly interrogated SQL database for example or a clustered Exchange implementation.
 My reservation mainly stems from when I used to run one of our DCs in a VM and it would often run like a dog randomly which I think mainly came down to virtual networking again which is when I came back to the idea that for business critical servers (such as domain controllers and Exchange) you just can't beat the real McCoy. ;-)
Of course amid all this you have to consider your backup strategy& how do you backup a virtualised Exchange server without taking it offline to copy the hard disk? I think even the backup agents in BackupExec just suspend the VM to do it! In this situation, backups for a real machine are far more superior. Keep these outside performance considerations in mind also when planning your deployment strategies.
However, I have to say that I havent played with the VMWare ESX side of things much which is obviously going to have greater advantages over Virtual Server for example.

Agreed - all valid points and considerations... ESX Server runs on its own platform and it enterprise level (Damn expensive as a result)... will be interesting to see how it goes... And yes, networking can be a bit of a pain, but the routing and control (especially on ESX) is suppose to be fantastic..  Thanks for being the voice of reason ajwuk  ;P

LOL, ironically I've got a meeting next week with one of our customers to discuss the pros and cons of virtualisation so this has been a great forum to bash some ideas out for which I thank you wct296. Maybe I'm just getting more cynical and old fashioned these days. ;-)

I'll know in about a month how good the ESX server solutions are... we are loading it across our enterprise - starting with a web server. I'll try and remember to look up this topic and update it with my findings..