Here are a few that I specify on my MySQL database servers. I'm sure someone with more MySQL admin experience might give me dirty looks for a couple of these, but they're what I use anyway. But I've been able to put a pretty heavy load on default installs of MySQL (hundreds of web sites accessing) with pretty decent performance. What sort of hardware resources do you have allocated to your VM? What is your storage system like?
key_buffer_size = 256M
innodb_buffer_pool_size = 32M
innodb_log_file_size = 32M
thread_cache_size = 25
query_cache_type = 1
query_cache_size = 16M
query_cache_limit =256M
max_heap_table_size = 32M
read_buffer_size = 1M
max_connections = 700
max_write_lock_count = 1
low_priority_updates = 1
max_allowed_packet = 1M
table_cache = 256
sort_buffer_size = 1M
read_rnd_buffer_size = 4M
myisam_sort_buffer_size = 64M