absolutely. I've used VMWare for all aspects of OneWorld - including the database server - BUT, and I strongly underline the BUT - I've never done this for a production environment.
There are several benefits to VMWare of course, but I don't need to explain to you what they are - but for certain other aspects, there are some drawbacks as well.
First of all, a Virtual Machine will not be able to utilize multiple processors on the host without the use of the SMP addon to the Enterprise edition of VMWare (GSX ?) - this addon costs a substantial amount of cash beyond the "workstation" version.
Secondly, memory is going to be tight as well. Application servers require quite a bit of memory depending on the task types they are processing, and the 1Gb limit to Workstation will certainly cause you some issues. Of course, GSX gets over that, but you're looking at serious cash again.
Although CPU speed is within 95% of the host system (extremely efficient) - Disk subprocesses will also substantially slow down since there are now extra software layers between the virtual disks and the physical disks. This might not be detrimental to an application server - but certainly to a database server.
I love VMWare. I run FreeBSD and a number of "windows" and other unix types under the host, and it works for testing and for setting up multiple java servers. Its great for demonstration purposes - but I certainly would feel a little scared putting it onto a Production system !