I wrote an editorial for today on virtualization and some hints about how to plan a project. However I wonder if more people are actually thinking of implementing virtual servers. Drop a note in the comments below.
I have friends that have successfully virtualized SQL Servers in production, and I have some that have failed miserably. The key seems to be lots of testing and planning as well as carefully choosing candidates. Just as not every server instance is a good candidate for consolidation, not every instance is a good choice for virtualization.
Pick lightly loaded servers to start with and be sure you have enough resources.