Using Microsft Virtualization in your Server Farm or for COOP

I have been pushing for the last 6 months for us to upgrade our Server Farm PowerEdge R900(made for Virtualization) and instead of us having 20 Servers across the board having only 6 each containing 4 Virtual Servers. I would use Windows 2008 as the Platform using Hypervisor to place the guest OSs on along with Windows Microsoft System Center Virtual Machine Manager 2008 R2 to manage those Servers and guest OSs.

Does anyone see any flaws with this design?

Does anyone out there use a similar design?

Does anyone who work's for DOD or other similar government agency see an issue with using Microsoft Virtualization over VMWare.