Although it's a red-hot topic now, I believe virtualization is just a stepping-stone to bigger disruptions and changes in how IT infrastructure is managed. I'm betting virtual machines become a ho-hum topic in a few short years, and disappear into the background as free, generic components.
First-off, most folks are viewing virtualization simply as using a hypervisor to de-couple the OS from the hardware... while allowing multiple OS's to share the same hardware. This begins to reduce the importance of the underlying hardware (making it more of a generic resource) and also allows for a more "fluid" approach to locating software applications. So, at a basic level, people are swarming around virtualization to "consolidate" software, making better overall use of existing hardware.
But, don't forget that networks can be virtualized -- i.e. VLAN switches, Routers and even naming/address spaces can be changed on-the-fly to make better use of resources, and storage can be virtualized too -- i.e. LUNs, file systems, file names etc. can be abstracted away to make better use of resources as well. Check out Xsigo that is virtualizing NICS and the network fabric, or 3Par that's virtualizing storage
Anyhow, pretty soon, virtual machines will probably disappear and become free utilities, part of the OS -- or, more probably, part of applications themselves. (check out the companies like rPath that are creating "software appliances")
Virtualization's _real_ value is as the enabler to allow for automation engines to create and control shared computing, network and storage pools. In effect, virtualization enables the automatic "impedence matching" that IT operations folks have been craving for years. The result? The ability to provide utility-style computing: rules-based optimization and re-allocation of resources in a data center - including usage metering and more.
My prediction? Virtualiztion will be red-hot for another 2 years - and then fade into the background like so many other technologies, to be replaced by all of the white-hot automation products to follow.