Several people internally at Microsoft have commented that you should turn off Hyperthreading when you're running Microsoft Virtual Server 2005, especially under load. It appears that the overhead of scheduling between logical processors gives either no performance gain or even possibly adverse performance effects when the host OS is under a "high load".
It's also right there in the Virtual Server Administrators Guide under Best Practices:
Disable hyper-threading technology
Under heavy computing workloads, hyper-threading technology, which allows a single processor to appear as two processors, may cause poor server performance. Because workload is dynamic and can vary quickly, we recommended disabling hyper-threading on the physical server to prevent this potential problem.
Just something to be aware of. I haven't noticed any problem myself - maybe I need to work this machine a little harder 🙂