six of one, half a dozen of the other

I'm not wanting to rubbish that, because I have nothing against virtualisation (though it doesn't always run different OSs to the host OS quite as nicely as they run when they're not virtual + it does tonnes of other stuff besides packing many separate servers on a 1U); but you do have to factor in hardware specs anyway if you intend to run virtual machines.

If you take a computer/server of whatever hw, when you install the virtual OS you have to give it access to a certain amount of the hw (normally RAM and hdd space); the point being, your original hw spec is divided into however many virtual OSs you run.

So, in reality if you don't have a high spec hardware then your virtual OSs will run slower! Also all the servers need to share the same physical network link to the switch.

So unless you have gone and bought hw that is a higher spec than you actually need then it's only really reducing the space taken up by the hw, to run virtual machines.
If you have specced the hw to the work it is doing, then that's about the same level of green-ness as making use of your over-specced hw by running more than one OS at the same time per physical server.

But like I said, I'm not rubbishing it - for a start, it's a fine excuse to argue in favor of multiple core and socket CPUs and 10gig ethernet being required.