It's funny to me that virtualization and cloud computing are often used interchangeably, and they are very different concepts. This confusion is leading to issues around enterprises thinking that just because they have virtualization software running, such as VMWare, thus they have a cloud. Not entirely true.
One of the better definitions of virtualization can be found on Tech Target: "DEFINITION - Virtualization is the creation of a virtual (rather than actual) version of something, such as an operating system, a server, a storage device or network resources." Thus, it's really how you implement infrastructure and not as much about sharing in a multitenant environment.
Of course the core problem around all this is that cloud computing is widely defined, so it can really be anything. Thus, when we began to look at the patterns of cloud computing, and the fact that most leverage virtualization, we naturally assume the interchangeability of concepts.
I see cloud computing is something much more encompassing than just simple virtualization, and indeed the industry seems to be moving in this direction. Cloud computing is all about managed sharing of resources, and typically includes the concept of multitenancy to accomplish that. Multitenancy simply means we have a system for sharing those resources among many different users simultaneously.
Also needed is the notion of auto-provisioning, or the allocation or de-allocation of resources as needed. Moreover, cloud computing should also have use-based accounting to track use for billing or charge backs, as well as governance and security subsystems.
So, you can think if virtualization as a foundation concept around cloud computing, but not cloud computing unto itself. I suspect that the two concepts will become even more blurry over time as virtualization technology vendors create more compelling cloudy solutions that include many of the features that make them a true cloud. Moreover, I'm seeing a lot of great technology hit the streets that that augments the existing virtualization technology in cloud directions, many spanning many different virtualization systems at the same time providing management and provisioning abstraction.
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