Wired has an article about how the army is using VR to train militaries.

Excerpts :

 "The multimillion-dollar system's origins go back to 1999, when the Army first partnered with a consortium of educators,  video-game makers and entertainment companies called the Institute for Creative Technologies.  The goal: combine the expertise of these seemingly disparate fields to create synthetic environments  that mimic actual wartime situations."

 "It's really all about cognitive training, decision making under stress,"  says Randy Hill, ICT's director of applied research.

 "The Army saves money on live-fire training, and also economizes by tapping outside expertise instead  of developing everything internally. Traditional outdoor exercises are still part of the training, but  they often don't convey the chaotic, complex nature of battles as well,  said Col. Gary S. Kinne, JFETS director at Fort Sill."