This question was asked internally and I thought the information was worth sharing, so thanks to Mark Stanfill for providing the answer:

SBS 2003 is supported in virtual environments.  The only unsupported component is ISA 2004, which (for rather obvious reasons) is not supported on Virtual Server (see http://support.microsoft.com/kb/897614/).  Exchange also has a number of hardware and software requirements that need to be very carefully weighed against a hardware solution.  For the complete rundown, see these articles:

Support policy for Exchange Server 2003 running on hardware virtualization software

http://support.microsoft.com/default.aspx?scid=KB;[LN];320220

Microsoft Virtual Server support policy

http://support.microsoft.com/default.aspx?scid=KB;[LN];897613

Running Domain Controllers in Virtual Server 2005

http://www.microsoft.com/downloads/details.aspx?FamilyId=64DB845D-F7A3-4209-8ED2-E261A117FC6B&displaylang=en

Virtual Server Technical Overview White Paper

http://www.microsoft.com/windowsserversystem/virtualserver/overview/vs2005tech.mspx

ttfn

David