Viral marketing and word of mouth marketing are not the same thing. They are not interchangeable, and it's getting kind of old seeing various media outlets and even job postings getting them mixed up. This is my interpretation of the two.
Word of mouth marketing is simply referral and recommendation. If I like a product or service, I'll tell someone about it, or possibly a bunch of someones about it, and if it's really good, they'll pass it along as well. Word of mouth is one of the very best sales and marketing tools, since the credibility of the product or service is tied to the credibility of the speaker.
Viral marketing is a marketing message that is self-replicating - hence its comparison to a virus. An example is when a service like Hotmail, Yahoo, Blackberry, or any of the free providers adds a "Get your account at xxx". Every message, every contact point contains a call to action designed to enhance the spread of the message - regardless of whether the speaker endorses the message or not. You may use Yahoo mail, but you may not necessarily endorse it or recommend it to friends. Nonetheless, when you use it, you are automatically transmitting the virus to others.
Viral must sound more hip and more cool to marketers than word of mouth, but when you step back and look at it, viral is non-consentual. Whether or not you endorse the message, it's embedded in your communications. Word of mouth is by far more powerful because endorsement is implicit in the message transmission.
Also, last I checked, viral things generally involved stuff like colds, flu, sexually transmitted diseases, and hard drive crashes involving non-recoverable data. These are not things that I as a marketer want associated with my product or service. "Get a student loan, it's just like the clap!" No thanks.
Word of mouth.