The vSphere design course has this as best practise - the reasons have already been identifed. VMware's view is, a virtual vCenter server has levels of resilience and redundancy you may not necessarily have with a physical server or have to pay a significant premium to achieve, ie MS clustering.

It also gives you the flexibility to increase the resources - Disks, CPU and ram if you need to. Using a physical server you may hit physical capacity limitations.

If running it as aVM you need to use common sense - if you have one or two hosts then the risks may outway the benefits, ie a failure of one host leaves the Infrastructure dependent on the remaining host. If you have 10 hosts and a resilient storage solution then why not.

There is no wrong answer to the host environment for vcenter - no one ever got fired for running it on a physical server and the same can be said for virtual.