KVM virtualization has been added back to Illumos and is also available from Joyent as SmartOS:
http://dtrace.org/blogs/bmc/2011/08/15/kvm-on-illumos/
Hopefully the next release of OpenIndiana will add support for it as well, seeing how they also use the Illumos kernel.
Second, Oracle is encumbering Solaris with a not-nice license. I haven't followed the latest developments because I no longer care, since I will never use a non-free OS.
Whether you meant to ask, "Why Illumos over Solaris" or "Why SmartOS or OmniOS over Illumos?" I think I have answered your question :-)