Virtual Green is made of People!
So you want to run Team Foundation Server, but don't have the physical machine resources. You think- 'hey, isn't Virtual Server a free download now?' You're right! And what's best, TFS works just fine in a Virtual Server. Having done quite a bit of testing against servers set up in virtual machines, I can attest to at least basic functionality (and much deeper for some features). Still, there are a few issues to consider of before put all your eggs in the bandwagon as the train leaves the station.
First, we generally recommend that any virtual machine have somewhat increased memory and hardware from the default recommendations, and the host machine should have approximately double the recommended RAM. Also, I've heard that it can help to have the virtual machine's VHD stored on an entirely separate physical drive from the drive with the host machine's OS. If you have other processor intensive operations running on the host OS, or other VPCs running simultaneously, your TFS performance will decline as well.
Also note that I don't know if virtual machines are an officially supported TFS hosting mechanism (I would postulate due to potential performance hits as well as network configuration issues between host and guest OS). That being said, for small teams, virtual machines will likely help ease the hardware costs of a new server.
Oh- and virual machines certainly aren't made of people, you know. They're made of other machines, chopped up and reprocessed into a messy pulp of silicon and plastic, and eventually reconstituted as a Replicant.