I am a HUGE fan of virtualization, and have been since the early days of VMware Workstation and Microsoft Virtual PC. The first time I had ever tried VMware I was amazed and saw the potential of using this technology in a business and even home environment. I used Virtual PC 2004 and 2007 in college for home work assignments dealing with my server operating system classes because I didn't have the money to build a 'real' test lab at home. At work, I utilize VMware workstation for advanced networking capabilities to build virtualized test networks complete with a working clients, AD/DNS, and a Microsoft System Center Essentials server....all from a Acer laptop.
With the advent of products such as Intel and AMD VT enabled CPU's accompanied with free VMware & Microsoft Hyper-visor offerings, virtualization has begun to be seen more and more in IT environments. The advantages I always tell customers about are the costs savings and robust backup and recovery features of utilizing a virtual environment.
When I talk about cost savings, I am talking about reducing the amount of hardware needed to setup a server or group of servers. What used to take 2-3 physical boxes to run a basic small business network for file/printer sharing, AD/DNS and Exchange Email now can be done with one server using virtualization. (I know that a Microsoft Small Business Server 2003/2008 can do all 3 of those services, but for a business that has more than 50 computers you would typically see 3 different servers, at least in my experiences I have.)
As for backup and recovery features, virtual machine images can be migrated and backed up quickly and easily. Just look at VMware's Vmotion and Vsphere products. These products are really exciting and for investment up front, the return in my opinion is real disaster recovery solutions that have been proven. I recommend looking at VMware's products, they are the most robust and supported virtualization product out there, but Microsoft's Hyper-V product isn't far behind.