After 10 years on Windows in the enterprise, I think 2008 will be the year of virtual guest machines being used for production as a near mainstream tactic for "Server Virtualization". VMware (as I've personally experienced) can be a lot to get going for a Windows shop, so I see the free Virtual Server 2005 R2 appearing as a way to take the now $5k dual-proc quad-core servers HP is putting out to good use. Few apps will utilize these I/O and CPU resources and with VS 2005 R2 SP1 out any time now, we'll see even more barriers being taken down for those that actually want to utilize their hardware assets.
Soon SCVMM will hit the streets, Longhorn will ship, and if you're a smart Windows shop and implementing SCCM, SCOM, SQL Reporting Server, and the other System Center products, you're datacenter will be humming along with near-amazing agility and workload insight previously only seen in very highly maintained 1%'er shops. The amazing thing is if you're willing to focus on System Center products rather than a mix and match of everything from other venders? you'll end up with something much like a true distributed computing environment with deep insight into what's going on at a application and "app system" level rather than the more common 'pinging port 80/443' to determine if services are up.
I believe this shift to virtual web and application servers will happen so quickly (for those that let it) that I'm hosting a Birds-of-a-Feather session on in at Microsoft Tech-Ed 2007 this year (Tuesday night). Come see what others are already doing to ensure their datacenter is "virtually ready".