Is this a good case for multiple SQL Server instances on a VM?
I'd say it's all based on the resource consumption (cpu / ram / concurrent disk activity) of each instance, as well as the overall health of the virtualization environment. Virtualization is all about resource queues. If it looks like physical environment might hit a bottleneck based on the cumulative resource consumption of three instances in one VM, it's better to break that into three VMs. Smaller VMs are more agile and have less of an overall impact to the physical machine, which lends to better performance. Larger VMs give you less individual OSs to manage, but tend to be larger consumers of resources and therefore harder to maneuver in the virtual environment.

If the overall load looks reasonable, you might be ok with the three instances on a VM. If the overall load is high and growing, split them apart into three VMs to be safe now and for the future.