For those of you thinking that this is a solution in search of a problem, let me outline where VMware is going with this.
At VMworld this year, Paul Maritz (VMware CEO) outlined their strategy for the future of the desktop - a world where users are given access to applications and data regardless of the end device. Today we see desktops as more device-centric, rather than people centric. VDI (Virtual Desktop Infrastructure) is a step in the direction of device-independence. It doesn't matter if I'm at work, at home, or on the road, I can get to the same desktop, applications, and data.
But going forward VMware is looking at delivering the entire desktop steamed down as a VM to a "client hypervisor", so instead of viewing as it runs remotely in a datacenter, the data is streamed down and processed locally so there's no lag induced by a high-latency link or something like that.
This works great for ordinary PCs or x86-based thin clients. Where VMware is going is taking their hypervisor layer and moving it to the mobile device, so that a user can get their same desktop (or a subset of its functionality) even from their PDA/smartphone. That's the purpose of this technology long term - it's not so you can run Android in a VM on your iPhone.
Kleeneness is next to Godelness.