The first thing to do is to talk to your application vendors ... each one will have a preferred solution, recommendation that they've tested, and supported environment. If you go outside those parameters you can find yourself with a broken system, or system you're trying to DR, and no support.
I've had mixed experiences with virtualised servers. Some just keep running with no problems (Dell hardware with Dell custom copies of the VMWare environment), whereas others (Dell hardware and iSCSI SAN, generic VMWare install) have monthly moments where all the hosts and the server become unresponsive (that's a mix of VMWare ESXi 3.5, VMWare ESXi 4.x). Check the hardware and application requirements as well, as VMWare changed their support for miniport drivers between versions (and hence SCSI backup interfaces) which ballsed things up, to use a technical term. And avoid virtualising anything on Windows 2000 - while you'll be OK 75% of the time, 25% of the time it leaves you in a world of pain ...
I'd recommend getting ESXi to play with first. The "virtualise your first server" stuff steps you through it, and works well. And always try to backup, mash, and restore your servers before doing anything else, just to know you can!