I use vmware esxi (free), cos that's what I bought to use in the office (the non-free version), so I'm already familiar with it. Only negative is that it requires Windows to manage it. There are other solutions (kvm/xen) but I am not that familiar with them, but it all depends on your requirements.
To put it into context why I use virtualisation at home on 1 machine:
- pfsense VM. I'm in the sand pit where telco's profits & children need protecting, hence lots of sites & voip services are a no-no. An OpenVPN service as an additional gateway on pfsense is required to get around this.
- linux vm1: normal squid proxy
- linux vm2: squid proxy on VPNLan routed through vpn GW (I can quickly change proxy settings in browser to bypass ISP restrictions when required)
- linux vm3: Access Point with USB adapter passed through. 3 BSSID's for Lan Bridge, Guest & VPN Wireless. (Though technically possible on pfsense itself, recent Linux kernels, or router distributions such as OpenWRT, have better wireless driver support than pfsense/freebsd 8.*)
- A couple of other Linux VM's for various applications - torrents, syslog, apache etc...
- An additional esxi (V)LAN to play with the upcoming development version of pfsense.
- Added possibility of installing an OS for evaluation later on without having to dedicate physical hardware.
But I (have to) run Windows in Virtualbox on Linux to use the vmware management client, aka 'VSphere client'.
This is all done on a Mini ITX i5-2400S (65W) with 8GB Ram with spare capacity left over.