OpenNebula is an open source virtual infrastructure engine that supports dynamic reallocation of physical resources. Today OpenNebula 1.0 was announced which now includes support for KVM. The server resources need at least linux kernel 2.6.20 and libvirt 0.4.0 with this release. OpenNebula is open source , released under the Apache License v2.0 and supports 3rd party software integration. More can be found on opennebula here: www.opennebula.org
I think it's good to see open source community producing software in the virtual infrastructure and cloud computing space as this is what is needed to take open source virtualization to the next level; already there are a few open source players. It is still relatively early in the virtualization market and will be interesting to see how the open source virtual infrastructure software space plays out.