Many people have this running as a VM, should there be an issue with the hardware where the VM resides, the VM will simply be restarted on one of the other nodes in the HA cluster. Yes there will be a slight outage as its retarted. You could also cluster VC between ESX servers if you wanted as well.
Even if VC is unavailable this will not effect the ESX hosts. You can always connect directly to ESX hosts instead of going through VC. Are you using HA/DRS? If so it provides failover in case the ESX host VC is on goes down. Also DRS will load balance your cluster so if a VM does use alot of CPU it will move the VM's around on other ESX hosts.
If you have HA and DRS then vCenter Server in a VM is very useful.
Note that VMware HA can work also without VC, so (for example) it can restart VC!
You can get great availability level for VC with HA, and also use VCB (or other backup solutions) to protect your VM.