Vikram,
Do you have a source for this allegation that Virustotal doesn't send a copy of the infected file to security companies? You are thinking of another service. AFAIK VirusTotal is not used by bad people because it DOES send the malware to antivirus venders. You have it 100% backwards.
Here is a blog entry from VirusTotal in 2008 mentioning that they are removing the
option to
NOT distribute.
http://blog.hispasec.com/virustotal/28
Here is a link from respected columnist Brian Krebs who just left the Washington Post
http://www.krebsonsecurity.com/2009/12/virus-scanners-for-virus-authors/
"file-scanning services like
VirusTotal and
Jotti, which allow visitors to upload a suspicious file and scan it against dozens of commercial anti-virus tools. If a scan generates any virus alerts or red flags, the report produced by the scan is shared with all of the participating anti-virus makers so that those vendors can incorporate detection for the newly discovered malware into their products."
Here's another article
http://malwareint.blogspot.com/2009/11/russian-service-online-to-check.html