According to this Infoworld article, Sun is finally addressing some of the big issues with their VM. I posted a couple of weeks back about how the Java community is re-learning why people did things the old way. Hopefully the Java researchers will figure out how to deliver Java as an os, but I think it will take a while to get it right. They will probably ship this in a year (ie. ages on the internet timeframe).
My advice to web devs: Just use PHP. It’s good enough.