In the previous version (3.0) installing ms crm wasn't supported on any virtual software. I often had to install it anyway, on usually a VMware environment, in my opinion still the most reliable virtualization software.
In the new operation system windows 2008 virtualization is added as functionality, this would be the first step to virtual supported scenarios in a production environment. Today a colleague bumped into this knowledge base article (946600), where crm 4.0 is officially supported on computer running virtual server 2005 in yes... a production environment.
Unfortunately only support is given to Microsoft virtualization software (e.g. virtual server 2005). Nevertheless, it is good development and in this would change the architecture in the future. It also becomes an even more interesting product in higher segment of the market. In this market you will find often big mainframe computers with lots of gigs internal memory and multiple processors, which host a virtual office network.