Last time I spec'd one out, they weren't too badly priced compared to an HP DL360, but lacked drive bays in comparison (the DL uses 2.5 SAS or SATA). However the X Serve can be had with a 1TB drive, so that makes up for it a little bit.
Can get DL360's with 1TB drives now. The bigger problem with XServe is that it is just 1U. It is so thin it is hard to dissipate the heat of more than a few drives (along with the CPU , ram , etc.). The drives in the 1U server should be mainly for the OS. If need to access any meaningful amount of storage that should be out in the NAS/SAN or direct attached. 6 disks cranking out watts all being blown back one your CPUs isn't really a good situation. Going to run on the hot side almost all the time which generally doesn't lead to good outcomes over the long term.
Also with so much going virtual, it's a tough pill to swallow having to buy an X Serve to run a VM of OS X Server. I'd love to run OS X server in a VM on XenServer or ESX, but obviously that'll never happen.
You
can run OS X server in a VM on any Apple box that has OS X server installed.
http://blogs.vmware.com/teamfusion/2008/06/virtual-leopard.html
So could run on a Mac Pro (it is a build-to-order option) Just kind of have to pay twice (or more) again for Mac OS X Server license for it (if don't get it pre-installed). XServe just comes that way by default.
The updated Server license doesn't seem to require that Mac OS X server has to be your dom0 though.
You may also install and use other copies of Mac OS X Server Software on the same Apple-labeled computer, provided that you acquire an individual and valid license from Apple for each of these other copies of Mac OS X Server Software.
The license says you have to install it on a Apple labeled computer physical computer (since Apple doesn't make virtual labeled ones it can't be one of those.

). Not that is running on the lowest level. VMWare is not supporting Mac OS X Server as a guest OS for ESXi though. Just Fusion. (likewise Xen and others with lowest level hypervisors. Just not interested in certifying Apple hardware..... yet) On a 1U or even Mac Pro just how many OS Servers copies can you run though? I'd want a 2U (or larger) box for virtualization so could get a decently high multiple onto the box if trying to do production/test consolidations.
There may also be some hackery (emulating EFI? ) if the Apple install process has a "are you really an apple box" portion of the intsall that makes sense to add to Fusion but not so much for the other VMWare products right now. And for better or worse these low level hypervisors typically can't deal with EFI ( expecting BIOS to jumpstart from)
Apple just seems to want a minimum of $499 per guest.