Here at work we’ve started the procedure of running Xen on all of our new servers. If you’re interested in the procedure I’ve gone through to do this, I’ve been cleaning up and maintaining the XenOnUbuntu page of the Ubuntu docs. We evaluated VMWare and Xen, but eventually went with Xen. The reasons for this are:

• Doesn’t depend on CPU extensions for near-native performance. We do not standardize on one server type, or one processor type for that matter, so we can’t count on having Intel’s VT or AMDs Pacifica instruction sets available. Using Xen, we can use Xen Hypervisor compatible kernels.
• Real time migration. Xen provides real time migration of VMs with no downtime. With VMWare you must purchase their ESX Server (expensive!) as well as VMotion. They recently released a free version of their server of course (most likely due to pressure from the rise of xen), but this doesn’t support live migrations.
• OpenSource and related backing. Xen is opensource, and is being backed by major opensource players (no Microsoft jokes here!).

The thing is, I love VMWare. I love their tools. They have web based VM managers, as well as clientside tools for both Gnome and Windows. I love their attitude. They are very OSS friendly ( they released their custom widgets for the Gnome client back to the community). They generally care about virtualization. I really enjoy reading posts from some of their developers, for example Christian Hammond. In our case though, Xen was just a better fit for our needs.