Virtualisation rocks
The reason we first considered virtualisation was the ease of restoring a backup: since the hardware is always the same, you can restore a backup straight to a new VM without worrying about Windows suddenly finding New Hardware.
However, after we found out what else you can do with virtualisation, we've gone a long way beyond that. We now use VMWare with VMotion, with 2 beefy poweredge servers and a decent SAN. VMs can be moved seamlessly between the 2 physical servers in order to do things like hardware maintenance or VMWare upgrades, and also to balance load.
We have a third VMWare server off-site (but cunningly on the end of a private fibre link) to which we make vreplicator backups: this means that if our server room burns down we just click on the remote server's management interface and hey presto, all our servers pop up again with only a couple of hours' data lost.
Having the nightmare of hardware failure taken away is like having an enormous weight lifted from you.
Being able to make clones of a VM and test upgrades on it is the second best benefit.
Not worrying about the hardware costs of buying a new server when wanting to run a new service is also a big boon: it's like shifting from pay-per-minute dial-up to always-on broadband.
We're running about 15 VMs per server: a mix of Windows and FreeBSD mostly, some high power (e.g. mail), some low power, but there's still plenty of room for more.
Virtualisation rocks.
Oliver.