VMWare have a new product in beta.  VMWare's description of the tool is as follows:

VMware Converter is a highly robust and scalable enterprise-class migration tool that reduces the time that IT managers spend converting physical machines to VMware virtual machines. Using a snapshot based cloning mechanism that is extremely fast and reliable, VMware Converter enables remote conversions without disrupting the source server during the conversion process.

It looks like it has a hell of a lot of promise including hot cloning.

Find out more about this new offering here.