That's not the reason. The host android has full access to the child VMs; the VM can't hide anything from the hypervisor. It's about isolation. The child VM can't leak your photos or contact list if it doesn't have it in the first place, and sticking things into their own VM provides an additional layer of isolation beyond what exists currently.
Erm... what?
> The only real way to win here is by using a VM which is what ChromeOS did.
What advantage would the VM provide, other than the host OS having even less insight into what the application is doing?
(Which is, by the way, exactly the only reason Android is introducing VMs: hiding stuff from the host Android)