Debian – Howto resize Xen virtual host disk size on Debian

Honestly, I don't see what benefit you would get using any virtualization technology.

• You are still using one server, there is no reduction in hardware use.
• As you have only this one server, the possible benefit of being able to migrate virtual machines (maybe even while running) doesn't apply.
• The amount of work necessary to keep the virt. servers running actually increases, as you have to do the base administration for the hypervisor plus every image, while not having enough machines to gain much by automating common tasks. Also, you will have the supervisor as an additional layer that requires your attention.
• Meanwhile, the benefit of having web and mail services on different machines is quite small with such a small userbase, and you will still need the same amount of care to keep them safe and sound, even when logically separeted.

In my opinion, virtualization is a cool technique which doesn't fit everywhere, and going virtual just because everyone does isn't a good idea (again, in my opinion).

KVM with virtio network and block devices managed via libvirt. Fits all your needs, has performance characteristics similar to Xen, and allows graphical management via e.g. virt-manager (which you can also use to manage Xen hosts, if desired).

As host OS I would suggest Ubuntu Lucid, Debian Squeeze, or Debian Lenny with backported packages (in this order). KVM/libvirt development progresses at a steady pace, so you typically want fresher versions than availably in vanilla Lenny.

Adoption of KVM is strong enough so that you will easily find suggestions and help for most questions you might encounter.