That's a bit of a generalization, and not really accurate anymore. Virtualization has improved considerably recently, and many production databases perform quite well on a virtual machine.

So the answer is really, it depends on the production database. What are it's requirements for I/O throughput, CPU usage, etc. There are some advantages to using Virtualizaton and also some disadvantages.

If you use pass through storage with a dedicated HBA, the only real tricky part that I have found is the allocation of CPU resources. That's the one part of VMWare that still in my opinion still has some issues that can make performance tuning tricky.

There is a very useful white paper on SQL Server Consolidation, and this includes using Virtualization to consolidate.

Here is the information about the paper:

Consolidation Using SQL Server 2008

SQL Server Technical Article

Writer: Allan Hirt, Megahirtz LLC (allan@sqlha.com)

Technical Reviewers: Lindsey Allen, Madhan Arumugam, Ben DeBow, Sung Hsueh, Rebecca Laszlo, Claude Lorenson, Prem Mehra, Mark Pohto, Sambit Samal, and Buck Woody