"You are absolutely deluded, if not stupid, if you think that a worldwide collection of software engineers who can't write operating systems or applications without security holes, can then turn around and suddenly write virtualization layers without security holes."
Quotas are easy enough to enforce. Most UNIX derivatives (including Linux) have disk and process quotas, some for over 3 decades.
Virtualization seems to be best used for reselling (and overselling) hosts that are smaller than the physical machine and not much else. Migration/failover is a non issue if you know what you are doing and if you need larger machines, it's just more overhead on top of a dedicated host. Plus it's increased administrative cost and more expense as a whole.