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My IT department is pushing me to use VM slices for out QA and UAT testing. I believe we should be using identical physical hardware to Prod.

Our prod setup uses 5 high-spec servers. For QA there would be 5 vm slices on a single high-spec machine.

Apart from the performance difference I’ve also experienced .Net Runtime crashes on VM slices which I haven’t experienced on physical machines (see this: http://stackoverflow.com/questions/3871067/net-runtime-bug-net-runtime-2-0-error-event-id-1000-crashed-my-program-wha)

Does anyone else have an opinion on this? VM slices or on physical machines for QA?

/Cost isn’t really this issue here. Correctness is.

+2  A: 

Having done some considerable QA/UAT work, I can say that it is preferable to have a test machine with matching hardware specs.

You can (and I have) done all QA/UAT work on VM's and these should be adequate for almost all testing. The only exception would be for load/stress testing.

Tony Abrams
There are a number of advantages to VMs including the ability to create images to a specific configuration point and be able to swap them in and out at will. I would agree with tony though that it is good to have at least part of your environment be similar in spec and configuration to your production environment.
Dan Snell