I run all my FOG servers as VMs, mainly in VMware ESXi or XenServer 6.2.

for 0.32 I had all Ubuntu but for 1.x.x I’m now using Debian 7 and it’s not been a problem at all. My virtualbox test clients boot loop but none of the physicals do the same…

You may be limited by your storage if you have lots of active VMs on the same SR/Datastore since disks only go so fast and aren’t the best performance for random IO. You may also get limitations on your network if you have active VMs on the same physical NIC… a 1gb link can be swallowed quickly while imaging.

everything depends how much performance you need, what hardware you have and how often you are going to be imaging.