Google doesn't need virtualisation because Google is already deploying a large number of identical nodes which can be easily pulled and replace (i.e. Google's infrastructure is identical to virtualisation, but without the need for it).
Most businesses don't have hundreds of identical servers and services. They have a few dozen very specific or niche ones which need high up-time. This is one area where virtualisation can play a great role.
Another example is someone like a host where they want to distribute resources without any human intervention (e.g. Virtual Private Servers, shared hosting, etc).
All in all you're now starting to see data centres turn into "dumb" hardware farms, with the logical design and deployment being handled up-stream. This even extends to things like networking (routes, switches, etc - all centrally controlled).
So, unless we are selling CPU hours, like owners of a mainframe or a hosting provider, we don't need any virtualization?
Is it possible that the inefficiency and added unnecessary complexity makes a virtualized servers unusable for the most common server's tasks, due to I/O interference and cache/memory access complications?)
I never said anything about selling CPU hours. It has nothing to do with that. In fact my example about organisations directly contradict that.
It has to do with organisation and about being able to abstract logical servers away from physical hardware.
There is very little inefficiency (see hardware assisted virtualisation point above) and very little overt complexity (go play with any modern HyerVisor solution).
As I said above you don't understand how virtualisation works. Your points about "I/O interference" and "cache/memory access complications" just make you sound ignorant.
Well, I'm really ignorant, when it comes to meaningless sentences like organisation and about being able to abstract logical servers away from physical hardware. You're probably right.
On the other hand, I'd been involved in a few projects, which includes optimization of a big centralized databases, so, I think, I know a bit about flows of data, access patterns and where the bottlenecks are (hint: around serializing and scheduling low-level I/O operations).
Try to look under the surface structure, which plain words are.)
You talk about edge cases. And you actually have yet to provide any data to back up your statement when it comes to penalty because of running it in a virtual environment.
Automated server management has been done long before virtualization stacks emerge, and it about utilizing monitoring and network boot.
What virtualization stack Google uses on its servers? None.