FWIW...Running Veeam 7 backing up about 100 VMs (heading for 300 when migration is completed off of VMware VDP/MS DPM) and we went virtual for the Veeam server. Having no performance problems at all, although we did make sure that we gave it plenty of RAM and CPUs (8GB/8CPUs) and placed it on its own physical blade for the pilot. Using a combination of iSCSI and FC targets attached to the Veeam VM. I would only use physical if it absolutely would not work or was dog slow. I don't like physical servers (except ESX hosts of course). They're messy and a pain. So we virtualize Exchange, SQL Server, Oracle, Sharepoint etc. Veeam was a no brainier as it's one of the most important systems and the more important a system is the more it needs to be virtual.