Xilinx XC2VP7,
As it's datasheet mentions, it has One PowerPC embedded microprocessor core inside. Also, total number of 44 hardware multipliers, each of them capable of doing a 18bits * 18bits multiply in one clock cycle ( or if higher clock freqs are needed in several clock cycles, as a pipeline ) which is some thing enough for most of DSP apps.
Also it has total number of 44 block memories inside, each of them 18 kbits, these memories as you know are very configurable, you can use them as single or dual port memories.
This FPGA is completely capable of most of DSP algorithms, however the main problem will be the design and implementation of these algorithms on FPGA. As you know, this time there is no easy to develope C language, and you should design your hardware using one of available HDL languages. However, Xilinx provides lot's of ready to use, cores which you can use in your designs. this will reduce the development time significantly.
Also, I think you should take care of total price for such a design. I think using a FPGA for DSP apps, costs much more than a DSP. Of course, this is not always true, but I think this is the case most of the times.
The powerPC core, inside Virtex-II will help you to devide your design into two parts, one that should be implemented using this powerpc, and the other part which will use the rest of FPGA resource.
Usually I think it is better to use powerpc for your control logic, and the rest of fpga resources as data path.