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at the end of the day this comes down to what the management say. you say that the management focus is to virtualise as much as posible. then there needs to be some give and take on both sides.
It is a fact that from a DBA point of view Less hosts, more instances make for eaiser management, in fact by the using instances you are infact virtualising the SQL level (ie fooling the DB into thinking it has its own resource when in reality it is sharing it with other SQL instances).
if you ramp up the Guests with 4vCPU you could/Will run into CPU scheduling issues. thereby reducing performance of your DB's by keeping your SQL servers leaner by scalling out not up and not having that many instances per host and using single or dual vCPU guests you will get a better over all performance. however performance will not be as good a bare metal.
do your capacity planning and sizing and test test test. Remember not all services are good candidates for virtualisation. even if you virtualise 40% of your DB,s that will be a consideralbe saving. also you can still do MSCS, but you will lose the ability to VMotion and participate in DRS/HA.
Tom Howarth
VMware Communities User Moderator
VMware Communities User Moderator
Blog: http://www.planetvm.net
Contributing author on VMware vSphere and Virtual Infrastructure Security: Securing ESX and the Virtual Environment
Contributing author on VCP VMware Certified Professional on VSphere 4 Study Guide: Exam VCP-410