Alternatives to Xen for virtualization setup

Solution 1:

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.

Solution 2:

If you're not opposed to a commercial solution, you could look at something like Citrix Xenserver. The free version (Citrix Xenserver Free) is unlimited in terms of VM/host capacity, it supports shared storage and live migration of VMs between pooled hosts;t emplated installs and cloning of VMs; storage snapshots; and it has a graphical management tool.