We run all our DBs entirely in VMs. A simple MySQL instance for powering a small website has absolutely no problem being inside a VM. Ever our MSSQL instances backing our production apps don't blink at being virtualised. This means I can enjoy all the benefits virtualisation brings while quietly ignoring the fact of hypervisor overhead.
Now, if you were running databases of the class where you start measuring your disks in IOPS rather than GB of capacity, then yes, virtualising that database is probably a Very Bad Plan.
Let's face it, virtualisation is not 100% efficient. You will not be able to achieve the maximum IOPS from your disk array if you have the overhead of virtualisation. Not only that, but if you are measuring your disk arrays in IOPS, you are probably absolutely pinning the CPUs attached to your database servers. There's no benefit to be had from virtualisation in that scenario.
The benefits virtualisation can bring exist entirely in the "my database is small enough to not really impinge upon modern hardware" realm. Get tot he point that your DB starts actually using the hardware it's on, and virtualisation will hinder, not help.
(All of the above in mind...a virtualized mirror of your DB is sometimes a good idea. It might not be as fast as the primary, but it doesn't have to be on a dedicated system to serve as an emergency backup...)