Until recently, I used it routinely for VMs, and it worked solidly and reliably. There is a ZFS storage backend as well, always nice to see since I've loved to use zvols for VMs, even when I did VirtualBox on OpenIndiana back before ZFS on Linux was viable.

But I found that Proxmox fit my needs much better than wrestling vanilla Ubuntu or Debian into a VM server, particularly for things like backup/restore and instrumentation, or setting up a bridge on a desktop-based installation. Since both are based on QEMU/KVM, it wasn't too hard to move my VMs (one thing you might need to look out for is changing network interface names).