Over at Gamasutra, Neil Gower writes that capable, modern-day hardware makes virtualization something game developers should consider for their development environments and all but the most GPU-intensive efforts.
Overall, virtual machines provide a surprisingly capable platform. In fact, for pure number crunching (CPU and memory) you’re only paying a tiny penalty for the conveniences provided by the VM. If you are I/O bound, things aren’t quite as cut-and-dry, but still worth considering. For example, if you want to set up a build server on a VM or virtualize your development environment, you’ll want look into the disk optimization features of the virtualization host. For much of what we do with our computers though, we don’t actually max out the performance of the hardware (at least not for very long), so the VM overhead is not a big factor.
I suspect it will be a while before you and I can run Crysis smoothly on a VM (yes I went there). Or will it?