We have been analyzing the possible uses of Virtual Tape, either the IBM VTS
or the STK VSM.  We are being very careful to select only data that is
appropriate for virtual storage.  "Appropriate," in this context, is defined
as:

1.  Data that is not required for disaster recovery.  If you send your data
to virtual storage, then you must have an identical virtual storage system
available at your DR site.  You would also need either the originals or
duplicates of your virtual tape backups, plus tape backups of your virtual
catalog.  And even if you have the tapes and the virtual tape catalog, you
will not have the data that existed only in the virtual system's buffer.
2.  Data sets below a certain size, tentatively 1.6 gigabytes.  The majority
of data sets created are small, and the virtual system can help with this.
If a data set is too large, it will go to the virtual system buffer, but
then need to be written off to tape almost immediately.  TSM gathers backups
of many files, compresses them, and packages them as larger files.  Thus you
are using virtual, a good solution for many small data sets, for the wrong
purpose.

Virtual storage is a good tool when properly applied, but is not a cure-all.
If it is not restricted to specific uses, it can cause many problems.