Virtualization
Nearly all of our new server setups use either virtualization or containerization. As you can read anywhere else, benefits included improved security, better management, easier disaster recovery, and less complex server setups.
Linux container-based virtualization
For Linux-only virtualization, we generally use OpenVZ which is actually a container system rather then CPU level virtualization system. Performance is much higher and RAM/disk usage lower then with virtualization systems like VMware and Xen. OpenVZ is included with the latest Debian 5.0 (Lenny) release, which streamlines installation and upgrades: there is no need to compile custom kernels or use third party package repositories.
Bare-metal Hypervisor based Virtualization
When more typical virtualization is required, we use VMware ESXi 4.0. While closed-source and proprietary, this free virtualization provides an excellent stepping stone to the full VMware vSphere platform when required and as budget allows.
As of Summer 2010, we are now an official Veeam ProPartner.