What a load of crap this statement is.  While it is definitely possible for a VPS to run horribly (due to incorrect setup, configuration, etc) this is a very closed-ended statement that assumes too much.  I'm glad to see later on in this thread that Dan didn't listen to this statement and gave it a try.

We have been running our intranet with DNN on a VPS for almost three years now.  If that isn't enough, we also host our EMAIL servers (Exchange 2007) and our SQL servers on a VPS as well.  In fact, almost every one of our servers, production or otherwise, are all running on a VPS.  These are all done with VMWare and they all perform VERY well.  Some of these servers (such as our intranet) receive thousands upon thousands of hits each hour -- they are pounded heavily and yet there they are responding perfectly well.

If servers performed so poorly in VPS why the heck would we run all of our enterprise systems on a VPS?  On that note, if that were the case then why would VMWare and other VPS providers be able to sell their product so well?

Honestly people... I know you want to sell hosting and get people to use your products so you can make money but lets not share "facts" unless they are indeed facts.

The real problem with VPS as I mentioned above is only when they are configured improperly or setup wrong.  The wrong setup I refer to is the hosting providers that want to make as much money as possible and completely overload the servers to the point that they DO perform poorly.  You just have to use your brain a little and make sure that resources are spread so they don't conflict one with another.  You know those jigsaw puzzles we did as a kid?  Yeah, the same concept applies here... just make sure the pieces all fit together and you aren't trying to pound one of the pieces where it doesn't fit.

Dan -- good for you for trying it out and I'm glad it works well for you!  I've been nothing but pleased with our virtualization efforts over the last few years; they have definitely paid off.