Sql – Reporting Services 2005 arrangement on virtual machines

I am having some difficulty in determining how best to implement the different parts of reporting services.

Our company has just bought a new slew of servers and a shared SAN to support our growing infrastructure.

Our servers are running VMware and we have several virtual machines each with their own tasks load balanced across the set of physical machines. We currently have an application server which runs terminal services, and a SQL box which runs 2005 to hold our data, as well as several others for other purposes unrelated to our database.

My question is:
What would be the ideal installation of reporting services in a virtual environment? We will still be dealing with the same amount of resources if we install everything on our current SQL box, or slice up the installation into several virtual machines. Slicing the configuration into distinct machines would help load balancing, but slicing it up will also require more licenses.

My current thought was to install the report server database on the same box that currently has our sql databases and install the report server service on another box to keep iis off the sql box with our operational data.

How difficult would it be to migrate from one configuration to another, or would i be pretty much locking myself into something once a decision is made?

Editing: Adding my options

The different configurations i can think of

A) benefit : easiest to set up. downside : scale out requires migrating back end

• 1. SQL Data Box holding our production data
• 2. Reporing Services DB, Reporting Services Service, and IIS

B) benefit : supports scale out without migrating back end

• 1. SQL Data Box holding our production data, and Reporting Services DB
• 2. Reporting Services Service, and IIS

C) benefit : best for load balancing virtual machines across hardware, supports scale out without changes. downside : most expensive for licenses

• 1. SQL Data Box holding our production data
• 2. Reporting Services DB
• 3. Reporting Services Service, and IIS

D) benefit : cheapest for Licenses. downside : lots

• 1. Everything on one box

So options A or B are my front-runners, with B having no drawbacks i can think of, but not sure what kind of load reporting services has on it's database if that would be a noticeable impact as the production data box will be being queried for the raw data as well. Option A would allow me to slice off a new virtual server and play with it while developing and keeping everything off our production box and we could then change our data sources to point to the production box and roll it out.

I'm still not sure what the best option is, so if anyone else has opinions they would be welcomed.

Thanks again, Wesley