VMWare Server is surprisingly powerful despite its low cost. I like it a lot better than Microsoft's VIrtual Server mainly because I find the interface to be a lot less awkward. Virtual Server uses a weird interface where you interact with a VM's console using an ActiveX control in an IE window. VMWare Server has a dedicated client that runs on Linux or Windows that gives more of a realtime feel.
Microsoft does not come out right and suggest that people do not virtualize DCs, but they do seem to caution you against doing it. It appears the big issue is that if you pause one of your virtual DCs, you can corrupt the AD because when the virtual machine resumes, it will keep on writing directory data while being completely unaware that time has gone on.
One feature that I'd appreciate with the VMWare products is the ability to lock out pausing a VM on a per-VM basis.