Microsoft runs over a 1000 Virtual Machines
Here's a great article based on an interview with Devin Murray, Microsoft's Group Manager for Utility Services who run the servers in Microsoft's Datacenters.
In the article Devin explains Microsoft's efforts to achieve "right sized" Server consolidation with includes a growing use of Virtualization.
Internally, Devin has acknowledges that the number is now more that 1200 VMs and growing.
Well worth a read.