Linux-VServer and it's apparent successor LXC are much better for resource usage than KVM, it's true.
There is that slight problem that you don't have different kernels under Linux-VServer, so older distros which break with later kernels won't work. The kernel's system call interface is backward compatible, but many other things which "system-level" utilities depend on are not, and those are needed to boot an old distro without spending lots of time tweaking it.
So, not so good for booting old distros, but fine for running applications on those distros provided they don't depend on a booted environment. E.g. it's great for running old versions of GCC.
What KVM is great for is taking an old, working machine (say using a Linux 2.4 kernel or earlier, or Windows of course) and migrating it into KVM on a new machine with almost no work at all.
So: KVM for old Linux images and other OSes where you need a fully booted environment; Linux-VServer or LXC for almost current images, or running applications on old images which don't need a booted environment.