We have been pushing virtualisation within kidotech, for testing as well as production servers.
Our first production server was the dell R805, a nicely spec-ed server with dual amd quadcore processors and space for plenty of ram, main drawback is the lack of local storage (2 x SAS drives) (we maxed those out, at 2 x 147GB (raid 1), and have been running 5 VMs on it.
1 x MSSQL2000 (win2k3 server)
4 x CentOS 5.2 (apache/ tomcat 6)
performance-wise, no complains; administration is also a breeze, the ability to clone and deploy (a standard image), console access via VI Client.
we have now reached the local storage limit, now looking for options as shared storage (NAS, SAN)
got a pair of HP xw4000 workstations (ESXi works out of the box) in the office to experiment with shared storage.
looking at openfiler/ freenas and a simple implementation of directly connecting the storage via a ethernet cross-cable.0 show us some love.