I had a new VM host at $WORK I was trying to set up, and I kept running into problems when installing a VM with koan/cobbler: it would complain that "at most 2047 MB can be simulated" for a VM. This was on a 64-bit machine, with a 64-bit kernel (CentOS 5.8), with 128 GB of memory installed (and detected), with a 64-bit guest being installed.
In the end, I had neglected to install the kvm package from CentOS, which among other things includes the kvm-kmod module. Once I got that installed and rebooted, everything went fine.