Interesting. We found better performance with VMware than the other two virtualization options that we tested. A lot of it has to do with your backend storage.

Overselling is not a option for us. When a instance is created and the user has selected a 4GB VPS we utilize the entire 4GB for the customer. A option is supported where you can allow a instance to use just the bare minimum needed up to a maximum but I feel that is misleading and you take a performance hit.