what kind of iterative development?
"not particularly good for iterative development."
What the hell is that supposed to mean. VMs for the most part have been great for almost all kinds of development. It's a really simple concept, allocate some CPU resources, some memory, and off you go. Sure there is some overhead but for the most part that doesn't matter (especially in development). Overhead is scrutinized more I suppose in the realm of cheap crap web hosts where they cut every possible corner to give you a slice of their stuff for $2/mo.
I've never used the VMware Lab manager product(never saw any value in it), I don't make extensive use of VM snapshots (except for things like OS upgrades), but being able to have a consistent interface regardless of underlying OS is obviously nice to have.
For the real world though VMs are fine for all but the most extreme circumstances. The overhead incurred is worth it 10x over, really. I mean I remember back in the earlier days of VMware GSX nearly a decade ago where VM overhead was much higher, and we only had single core CPUs, and 16GB of memory was considered a lot.
It was still a critically useful technology to have for development (I deployed my first production VMware on a GSX 3.0 back in 2004 - it was a stop gap because we didn't have a half dozen physical machines to deploy this last minute application for a customer(the original plan was to deploy new code to a larger production cluster and share it with the new customer but there was bugs in the code and that plan had to be scrapped at the 11:59 hour). So we snagged a 2U dell box that the devs were using to develop this app stack on and shoved it in production in ~72 hrs(much of that time spent configuring and testing the application). The box took more load in 24 hours than the customer expected it to take in the first 30 days. Naturally the app blew up, there wasn't enough CPU to drive all those TRX on such a shitty application. But we managed to get through the days until we could add more capacity (in the form of more web servers outside of the VM host). The VM host lived on for a good 6 months or so before we retired it in favor of more modern physical hardware.
I sat through a presentation on the Redhat platform stuff I believe it was last December, and couldn't help but think how much waste it had - specifically with DB servers, they were seemingly advocating deploying database servers like you would web servers. Instead of consolidating onto fewer, more powerful DB servers that are better optimized(DB caching specifically). The approach was "interesting" but not something I can ever see getting behind myself (much rather use VMs).
The use of containers (ala Solaris containers, or FreeBSD jails that some folks used to promote) is cute, but that's about it - IMO of course. Like most people I'm not in the business of racing to the bottom, or in one user's words from my first job in 1998 "squeezing every last ounce of megahertz" out of the system).