Norwest Venture Partners on Wednesday announced that it had closed a new venture-capital fund sized at $1.2 billion. That’s nearly double the size of the Silicon Valley venture firm’s last fund in 2006, which closed at $650 million.

The new fund is unusual in this day and age amid a tough fundraising environment brought on by the recession. What’s more, many venture capitalists argue that funds need to be smaller to get back to the basics, especially since venture capital isn’t an industry that necessarily scales upwards.

Here’s what Promod Haque, NVP’s managing partner, had to say about all this:

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Interest in social gaming is jumping to new heights. One of the players in the space, Playdom Inc., just raised a giant-sized $43 million round from Lightspeed Venture Partners, New Enterprise Associates, Norwest Venture Partners and Rick Thompson, one of the co-founders and an existing angel investor in the company.

That funding comes just a day after news that competitor Playfish Inc. has agreed to be acquired by Electronic Arts Inc. (ERTS) for $300 million plus $100 million in potential earn-outs. A third company, Zynga Inc., which also makes games played on social networking sites, has raised nearly $40 million from venture investors and is currently locked in litigation with Playdom over theft of trade secrets.

We caught up with Tim Chang, principal at Norwest, to talk about Playdom’s latest funding. Here’s an edited excerpt of our interview:

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If anyone had doubts about the viability of a business that is purely focused on making videogame applications for Apple’s (AAPL) iPhone and iPod touch, venture capitalists aren’t among them. Ngmoco, known for iPhone games like puzzle-adventure game Rolando and word game WordFu, said on Monday that it raised $10 million in a new round of financing led by Norwest Venture Partners.

Game applications are among the most popular applications on Apple’s App Store, which lets users choose from thousands of software programs that developers have created for the iPhone and iPod Touch. Apple said last week that users have downloaded 800 million applications since last July, when the App Store opened. Out of the 25,000 apps available in the store, more than 6,700 of them are games, according to Mobclix, which analyzes iPhone application usage.

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Competition is intensifying in the virtualization sector.

Red Hat (RHT) this morning announced an agreement to acquire Qumranet, an Israeli company that provides a virtualization software platform, for $107 million in cash.

Qumranet’s Web site says that “organizations use Qumranet’s first product, Solid ICE, to host Windows and Linux desktops centrally on servers in the data center.” Investors in the company included Sequoia Capital and Norwest Venture Partners.

The company said the acquisition will not materially increase revenue in the Feb. 2009 fiscal year, but should add “up to $20 million” in revenue in fiscal 2010. Red Hat said the deal is expected to be dilutive to 2009 GAAP EPS by 5-6 cents a share, and to cash flow from operations by 3-4 cents.

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