if people are looking at virtualisation then in production, something like MS virtual server or vmware server are really not the product to look at, theres a reason they are free...........
VMware ESX Vi3.5 is the market leader with about 80% of the market so thats what I would suggest. A host based (free) product will typically gave a 15-20% overhead whereas a bare metal product (esx) has about 2-3% overhead and is more secure.
To get all the fancy features you need a san of some sort.
People can get between 2 and 20 vm's onto a physical box and that is only going to increase as processors increase cores and ram increases etc.
People don't normally look to virtualise IO intensive apps such as SQL or Oracle, only for testing with those products.
THings that work well are DC, print, FS, exchange roles, AV, WSUS etc.
MS is going to try and take some of vmwares market share with windows 2008 but it remains to be seen which product is better, they are going to be architected in slightly different ways.
Citrix now has Xen which is another option, 99 of the fortune 100 companies run vmware in a production environment, i'll leave you to work out which one doesn't.........