I understand this topic is over a year old, but I just ran into this issue myself, and wanted to share what I was able to do to resolve it.
We are running vCenter 5.1, and have DRS set to manual. We have a small cluster of two hosts on which the VMs run. When logged in as big bad Administrator, powering on a VM results in a dialog box for choosing which host to run the VM. However, we have lesser-privileged users that were given power on/power off privileges to specific VMs, but upon attempting to power on a VM, the dialog box did not appear, and the VM never turned on.
I found that the permission needed for this activity is Virtual Machine > Interaction > Power On. Most likely, the Power Off, Suspend, and Reset permissions would also be desired, but I don't think they apply to this specific issue.
To resolve this issue, I found that permissions had to be set in 3 places:
1) VM itself
2) Hosts that will run the VM
3) Datacenter where VM resides
The first one is easy. The other two are tricky because if you set those privileges that high up, they will by default propagate down through the whole tree, and the users will potentially have those privileges for every VM, instead of just the specific ones they were supposed to work with. Also, I initially set propagating permissions on the cluster itself, which worked. But when I changed it to only apply to the cluster (no propagation), it broke. That's when I discovered that I needed to set the non-propagating permission not on the cluster, but on the hosts in the cluster.
Anyway, in summary, here is what I did:
1) Created a new role and gave that role the Power On, Power Off, Suspend, and Reset permissions.
2) Gave my users this role for the VMs they needed to play with
3) Gave my users this role for each individual host in the cluster - no propagation (this was done under Hosts and Clusters)
4) Gave my users this role for the applicable Datacenter - no propagation
It is admittedly a little hokie, since I don't like having to manage what essentially amounts to a single permission in 3 different places. However, it definitely works for my purposes. Hope this is helpful for you and anyone else that comes searching for this same problem.
Thanks,
Doug