Too long, didn't read:
"The primary benefit of virtualisation is ease of provisioning of new servers. Use it."
Tony, you say that "A good starting point is to monitor the physical resource consumption of the original servers hosting the applications over their typical work cycles" which I agree with.
The problem comes when translating this to the virtual world:
Provided your application is distributable (if not, why?!?!), you will have to break a monolithic physical server into smaller pieces, then scale up the number of servers used *as a reaction to changes in demand*. Remember, getting a clone of a server (should be) is a simple click of a button, not a protracted ordering of hardware followed by installation woes. Why not use this?
The way to move to "the cloud" is by breaking up your apps and scaling according to demand.
... I suppose Monolithic Servers that are required for a short period of time will still fit the bill, but an always on VM that takes up most of a node may as well simply *be* that node.