i'm running mix of esxi and vmware servers under debian linux. i dont have san, just raided local drives, my biggest concern is 'backupubility', i dont need very high performance nor i suffer from some slowdowns [ at least until now ]. all runs under mix of dell poweredge 1950 and poweredge 2950.
 for hosts running under esxi i run partial backups from within virtual machines, no rocket science here, all works well and in stable fashion. 
 for vmware server - i keep virtual machines on lvm partition and use lvm snapshot feature for 'hot backups' [ that is - without interrupting virtual machines ]. i DO KNOW that this is unsupported mechanism that can lead to unrecoverable backups but with additional backups from within vm guests - i feel comfortable with that thought. also so far i've recovered complete vms dozens of times without any problems. 
 for vmware server i've done some host and guest tuning: 
  - vmware keeps it's temporary files on /dev/shm
  - i've turned off memory trimming / over-committing for guests
  - i keep vmware tools installed under guests
  - for linux guests i've elevator set to noop, kernel clock set to no_hz
  - i've done some common-sense optimization for windows guests including turning off unnecessary services, disabling screensavers and hibernation etc.
  
 i'm quite happy with the setup. i'm using vmware server since v 1.0 without much hiccups. i've noticed that usage on host system of vm with 2003 grows steadily over time. reboot of vm does not solve the problem so every ~2 months i shut down such vm completly and boot it up again. symptoms suggest it's problem with vmware rather than windows itself.
 but it all depends on your workload, in my case i have quite lo disk i/o requirements for guests, this is performance bottleneck that i expect to hit sooner or later.
 hardware advice? all depends on workload; take:
  - 1x quad core or 2x quad cores
  - plenty of memory [ 16-32 GB are cheap nowadays ]
  - if you need io - take 4-8 disks in raid 10