Server virtualization basically means that you create 1 or more virtual servers on a physical server. i.e. There is some software that does some fancy magic to make it possible to install multiple operating systems on your computer as though they are a complete system on its own.
The major benefit of server virtualization that I can see is the fact that the server itself is in effect a file now when it is Virtual. You can take a snapshot of the server and copy it off to a new location. In the event of a massive failure, all you need to do is copy the file back and you will have you server running as it was when you took the snapshot!
This is obviously fantastic if you consider that you can make backups of your entire server with the click of a button just before a software upgrade and then test to see how it goes. If you are feeling really clever you can even take the snapshot of your server and re-boot it on another computer and test the software upgrade away from the live environment!
Another fantastic feature of server virtualisation is that you can run almost any operating system as a virtual server! So you can have one Windows 2008 Box that has Windows 2003, Windows 2000 and even a flavour of linux running on it all at the same time!
Virtual machines can also be migrated to new hardware much more easily as the snapshot of the server can be coppied to a new higher spec machine, more resource allocated to it and then turn it on and BAM! Server upgraded!
The downside to virtualization technology is that if you have one physical server running several virtual machines, then if you loose the one physical server due to hardware failure, you loose all the virtual servers running on that hardware.
You can setup some advanced configurations that will automatically fail-over to another server, but eventually you need to consider your risk appetite and your budget.
But I think virtualization is definetly something to look at if you are getting a new PACS system.
