Virtualization and iSCSI: Match made in heaven?

I mostly agree with that statement. The caveat is: make sure that your network is capable of handling that type of increased workload/throughput. From my perspective, the biggest inhibitors of successful iSCSI implementations are the network bandwidth between the storage and the host, and the host operating system's ability to address the storage via built in drivers or a TOE (TCP Offload Engine). The other factor to consider is distance. The scenario you describe is intra-datacenter, where, if you have a dedicated network between the storage and the hosts, you're good to go. But if you toss distance in the mix, you will have some latency issues.