The most famous liveCD Linux distribution, Knoppix, embraced virtualization completely with its 5.2 version.
The new release in fact sports all open source virtualization packages, including Xen, OpenVZ, QEMU (with KQEMU accelerator), VServer, and UML, up to most recent solutions KVM and Virtual Box.
This almost complete set (VMware Server/Player for Linux are the only missing since they are not redistributable), along with easiness of liveCD approach, makes Knoppix probably the best solution to approach virtualization for newcomers.
Unfortunately Knoppix 5.2 has been presented and distributed at CeBIT 2007 on physical support only. Who didn’t attend the event will have to wait April to download the DVD/CD ISO, free of charge as usual.
Take a look at the remarkable features list here.