Tried it, failed it, and might try it again!!
We did a new project for a customer and bought 2 dual quad core CPU boxes, plenty of RAM and disk, and VM Server, to run a multi web server site on (open source OS).
The next project we went back to separate metal, as it was a damn sight cheaper than buying the same processing power in a bigger model up chassis.
As for the power argument that was also a little moot, as we were comparing 2 bigger boxes with dual PSUs with 4 smaller boxes running single CPUs, so the draw was not much different, when actually measured going into the boxes. The web servers also took up the same amount of rack space, so no wins there either. Other than the ease of throwing up a new VM, there's nothing in it.
On top of that we have just discovered that one of our offices is running 'x' VMs with paid for OS's and have had to spend more than £20k on additional servers lics due to uncontrolled OS deployment. That's the bit of VM world that they forget to tell you about!!