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I work for a small company with around 100 Notes users (and some clients who use web stuff) and we run all our Domino servers on VMWare with the storage on a SAN. Works really well, and I'm yet to come across an issue that could be traced to the hardware platform or VMWare.
I think it's a really good fit, especially if you have growth in stuff like mail files and archives.
The virtualisation thing is a good idea no matter what you're putting on it, so Domino is a good option there.
I'd expect that the majority of large shops would be running at least some of their domino servers in virtualised environments and most would have the data on a SAN.
The only disadvantage I can think of is that it could be a little more costly for a smaller shop to maintain the hardware (particularly the SAN), but there are some benefits to be had.
Anyway, just a quick real world example for you.
-Brendan
Feedback response number WEBB85F6CH created by ~Manny Prekisonjip on 05/14/2010