Article on the register today reports VPS hosting company LXLabs full customer base hacked due to vulnerability in their HyperVM VPS management application.
http://www.theregister.co.uk/2009/06/08/webhost_attack/
The main reason this was possible is HyperVM requires giving customers (the public) access to your Hypervisor OS (through the HyperVM web application).
FireHost recognizes these risks and made the decision in the beginning to not give any access to the hypervisor, in fact it runs on a completely out of band private network!
Any remote command to the hypervisor go through private VPN through an API which is limited to only basic features like stop, start, reload and rename VM. It's highly controlled and secure unlike HyperVM which ran directly ontop of the hypervisor.
Virtualization security is going to continue to be a hot topic and Firehost Inc. leads the way by providing true advanced security while sharing knowledge and best practices on our blog and security center.
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