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The hypervisors themselves keep becoming more efficient, and therefore have less overhead when it comes to high load virtual machines. But there is still overhead. Hardware can only help so much.
Xen and its use of the virtualization technologies at the processor level is a step forward (specifically when handling high numbers of kernel calls like you see in enterprise SMTP gateways and what not), but no type one hypervisor can claim they are better than any other for high I/O servers. If one is better, it is a slight edge.
As we move into the future, overhead will reduce, hardware will get better, and this will become less of an issue, but in some cases moving something like a highly utilized Exchange mailbox server (think 5000 mailboxes) into a virtual machine may require you break it down into a few smaller mailbox servers to achieve the same performance or determine (through testing) that the decrease in performance is acceptable at the end user level.
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