A. WSV in Windows Server 2008 will initially support QuickMigration between Server 2008 boxes in a cluster, in which the virtual hard disks (VHDs) reside on shared storage (e.g., a SAN). When a migration is necessary, the virtual instance is essentially placed in a sleep mode, then resumed on another node in the cluster. The downtime is basically the time necessary to dump the memory to file, about 8 to 10 seconds per gigabyte.
A future version will support Live Migration, the zero-downtime migration process that is already written but needs to undergo huge amounts of testing because of the range of hardware Server 2008 supports. In this instance, the virtual instance's active host pumps the virtual instance's memory over the network to the destination server, then switches over once it's done. It literally pauses the virtual instance and starts on the other, but it's so fast that it's virtually undetectable.
The more detailed process is as follows: Start copying memory over the network from the first virtual instance to the second virtual instance while still running on the first virtual instance. Once it's all copied, switch to the second virtual instance as the live instance. During the switch, any memory that couldn't be copied or changed is sent over. The pause is the time to move the delta amount of memory, but that's a tiny fraction of time.