In the Virtual Trenches
As someone who works with virtualization software on a daily basis, we can give you some pointers, opinions, and suggestions for your environment. These are from my experiences; they may be biased, and, as always, your mileage may vary.
For true Enterprise-ready virtualization, you can't beat Xen or VMware ESX. They are robust, easy to use, well supported, well documented, and ready to go to work for you. Hypervisor technology is absolutely the right decision if you need to virtualize multiple operating systems on one host system. They are both costly solutions but well worth the price you pay for the performance you receive. You should use this technology in situations where disk I/O is of major concern.
As to which one of the hypervisor technologies we prefer, we're afraid that we can't answer that for you. Either one you choose will serve you well.
Solaris Zones (containers), and any jail-type virtualization, works extremely well for UNIX host systems where you want a consistent and secure environment with native performance. Kernel-level virtualization is extremely well suited for isolating applications from each other and the global zone (host operating system). This type of virtualization is an excellent choice for anyone who wants to get acquainted with virtualization for no money, little hassle, and ease of use. We highly recommend this virtualization method for your Solaris 10 systems.
Microsoft Virtual PC and VMware Server are great choices for testing new applications, services, patches, service packs, and much more. We use Virtual PC and VMware Server on a daily basis and can't live without them. We wouldn't recommend either for heavy production or Enterprise use, but for smaller environments, desktops, or IT laboratories, you can't go wrong with these. They're free, easy to use, durable, and can host a wide range of guest operating systems. In this same arena, Sun's xVM is also very good.
VMware Server and Sun xVM are both available on multiple platforms, whereas Virtual PC is available only for Windows.
We deliberately left out several other virtualization products from this dialog. Either we've had less experience with them or less good experience with them than the others mentioned previously, and we don't want to keep you from investigating them on your own. We are not diminishing their value or importance for viable virtualization solutions, but we just don't feel qualified to speak for or against them in this context.