I have the same question. I'm looking at virtualizing my office's server and just downloaded (but haven't tried yet) VMWare Server.
Are there any big differences in functionality between the two? What about licensing - IIRC with VMWare Server you need a separate XP license for each virtual machine. MS could really jump ahead if they let you run multiple Virtual PCs with the same XP license. XP Pro licenses are running about $125-$150 on eBay right now and I'd love to save the cost of a couple of them.
We'll have to find out as far as features and functionality how they stack up. I can tell you that I've been very happy with VMware server, Workstation, and their ESX servers. Don't really know about the Windows licensing aspects, as I mostly use vmware to virtualize test domains and stuff. We don't support windows here, so it's not an issue with me.
Hopefully some folks will chime in on licensing for windows in virtual containers.
If youre running your servers on XP pro you have bigger problems.. And I highly doubt MS will start letting you rung three instances of their server product for free.
Both companies have several different versions of virtualization, so that's not an easy answer. If you want to use Vista as a host, this new Virtual PC is about all there is right now. VMware offers a free beta of Worksation 6, but I wouldn't load beta software on Vista plus that's going to run out and cost you $150 down the road as VMware is bad about time bombing their products. You can also try VMware Server on Vista, but you have to boot into unsigned driver mode each time which is a major pain. As far as any break on licensing for your guest Windows VM's, I think that only comes into play if you buy Windows Server Enterprise Edition @~$2,500, but you do get to run 4 free Windows Server VM's on that system without having to buy the licenses for the VM's. We use both VMware, which is better for virtualizing other non-Windows VM's, and Windows Enterprise, which is cheaper for managing Windows Server VM's.