Preferable VM software for a small dev team

Solution 1:

If you're looking at setting up a dedicated server for your Devs to use I would recommend VMware's ESXi. It's free and fairly easy to setup but it does run on the bare metal so you would have to blow away your server or install VMware Server on your 2008 server to play with ESXi before hand.

VMware workstation, VMware Player and Virtual Box are all good choices if want to run the software on the developers local machine. This way they can run the same setup as the live server without walking over each others changes.

I actually use both ESXi and VMWare workstation in my test environment with Workstation on the local developers computer, ESXi running on a QA/internal server, and ESXi running the live site.

Solution 2:

I would recommend VirtualBox. It's capable on many levels, easy to use, and free. And yes, use your current servers until you run out of capacity, which will probably be farther down the road when you expect and you'll have a better idea of what you need to expand and grow.