The performance difference between vmfs and rdm are very small. Whether it's possible depends entirely on the workload you're trying to virtualize. SQL Server loves memory and IOPS (and sometimes CPU). You also need to take into account the licensing part, some editions can be costly combined with vmotion and drs.
You need to dig into how much load on disk, memory and cpu your current setup has. Also keep in mind that even though virtualization has some performance costs, it also brings some new possibilities like snapshots before updates, drs, ha, fault tolerance, online addition of cpu and memory (depending on host and guest os versions)
Do everything you would it the physical world, like 64kb block size, aligned partitions, locked memory pages (sql 2008), separate os, swap, master, tempdb, data and logs. Create a tempdb logfil per core (all of equal size).
I'm running quite a few SQL Servers in our virtual infrastructure. They are not recordbreakers, but they do their job within parameters. I've also got a physical SQL cluster and because I needed to give it 64gb memory so it was economical unwise to make it virtual.
If it's important, take a look into database mirroring (SQL Server feature) to increase your availability freely (the standby server is free as long it's only used for that purpose)
