More is not always better when it comes to virtualization!
Our SIMS server is on a physical box: that was only down to forgetting we had an extra ESX licence. We have the same issues - 16 cores it can play with, 48GB ram, SAS drives and reports are still often sluggish as is the rest of SIMS if the data admins are running large reports etc. I intend to P2V it at Easter and expect identical performance.
Ours is virtualised on ESXi, has been for a while. 8 Opteron cores, 30GB of RAM dedicated (no pagefile on the hypervisor). Also has 8 10k SAS in RAID 10. Reports can still sometimes take a little time but they're pretty quick now. Overall VM performance is mentally quick though, disk I/O is awesome.
Ours is virtualized and has been for over a year now with no noticeable issues, but we are a small site in general terms.
I have had to rerun the database reindex patch on a couple of occasions so might be worth investigating that if you are having performance problems.
We're running on Hyper-V with 4 processors and 8GB of RAM. Underlying system is iSCSI (two host cluster with 16 core Opterons, and 72GB of RAM), which might not be helping. We definitely noticed a speed decrease when switching to this brand new system, versus a 5-year old physical server.