SQL Server, both 2005, and 2008, have both been supported in virtual environments. This means that, providing you followed the specific guidelines for SQL and virtualisation, you could happily virtualise SQL, as a standalone instance, on a virtual platform.  This was acceptable for a number of smaller organisations - the fact that you could virtualise a SQL instance, and make it highly available on a virtualisation host cluster, gave them a greater level of resiliency than they had before.

More info: KB956893