We are for sure. We run a number of physical hosts using SmartOS (only 20 or so, but they're quite big (512GB, quads)) and on top of those we use a mix of KVM

We are for sure. We run a number of physical hosts using SmartOS (only 20 or so, but they're quite big (512GB, quads)) and on top of those we use a mix of KVM and zones (both solaris and lx) for various workloads (around 400 zones/vms). It's easily been the correct choice for us. YMMV.