• 4 cores would reduce contention and thus allow you to run more processes with more CPUs. WIth a single dual-core, your vms could only have 1 processor assigned.
• Microsoft often limits their products to 1 physical processor, regardless of the number of cores. However, if the processor is virtualized, then each core is a logical processor. So then, have we basically cut down on the performance that we can get out of a licence? If the answer is yes, then fast cores is what we want, but then we still come out behind with vmware vs. native. If the answer is no, MS can still determine that the 4 or 2 cores are from the same physical processor, then the 4 cores are the way to go, and we don't come out behind using vmware.

For the free versions the MSSQL 7 and 2000 based versions were limited to 2 physical CPUs, 2 gigs, had a resource governor, and allowed some pretty sophisticated replication. Starting with 2005, the express versions expanded the database limit to 4 gigs, no governor, crippled replication, and 1 physical CPU. In fact let's use the term SOCKETS because that is what MS uses now for clarity. In this case only one socket sees the load no matter how many you have.

Other:
This entire thread is about how applications see VMware virtual processors, and the effect of licensing, which is done by SOCKETs. It doesn't matter if we are talking about a one, two, or four socket version of an app or operating system, it would be the same problem. As a simple example: You buy a version of something licensed for 4 SOCKETS, and you put it in a box that has 4 quad cores in it. If you run it natively, all 16 cores would be available it. If you use it under VMware, and IF the app cannot determine that the virtual processors are from the same SOCKET, then each core counts as a SOCKET, and you would only be able to leverage 4 of the 16 cores for that application or operating system and the other 12 are doing very little. That's like pulling 6 of the 8 spark plug wires off your engine and running on two of the 8 cylinders. Keep in mind that this is an assumption. Everyone that has commented here doesn't really know and has not tried tried it. That's the answer I'm after.

If people simply have a pile of servers that aren't hardly doing anything, and want to consolidate them, than anything will do, including just consolidating apps on servers with same OS. If we're talking about a data center where you need to balance loads, migrate, etc., if you had to run 3/4 more instances, then VMware could cost you money even if they gave you the whole shebang and set it up for you for free. I've been down the virtualization road several times. The reason it has grown so slowly is because the price and performance of hardware keeps going down. The electricity savings proposition is about as valid as corn gas. My interest in it is not to save money, but break somewhere near even, and have more flexibility. Nothing is easier to grow or migrate than a virtual environment.

If you buy a windows 2008 server enterprise license, you can run up to 4 virtual 2008 servers with that license

If you the datacenter version, you can run an unlimited number of windows servers. The datacenter version is licensed per socket of the host physical machine

http://www.microsoft.com/windowsserver2008/en/us/licensing-faq.aspx#virt

http://www.microsoft.com/windowsserver2008/en/us/licensing-datacenter.aspx