I'm about to deploy a new low-end server and I had considered using ESXi to virtualize the OS to make it really easy to migrate this server to new hardware should the need arise.
I ended up talking to a Dell server tech and he was quick to point out that this is not valid use of virtualization and that I would be better off just using Ghost to create an image and then restore that image on a new server.
I have very little experience with Ghost, but my understanding is that this process could cause all sorts of problems with video drivers, network drivers and raid drivers if the new hardware was very different than the original.
Is Ghost sophisticated enough to solve this problem, or is the Dell rep talking out of his hat?
What you are considering definitely is a valid use of Virtualization; whether that's the right way to go or not is entirely up to you and your needs.
As to the question of managing the drivers, Ghost (which for this discussion is genuine Ghost, sold in Ghost Solution Suite, not the unrelated product which assumed its place under the consumer "Norton Ghost" brand name a few years back) contains a tool called DeployAnywhere for retargeting systems to get the right drivers available after you deploy an image.
DeployAnywhere takes a little more work to use when you deploy manually, as you generally do with servers, mainly just to ensure that the drivers it needs to install into the newly-deployed system are available to it (such as on a boot disk or network share) at the time. For workstations, deployment through the Ghost management console takes more care of that for you, it's just another part of the process along with renaming the machine and reconfiguring it.
That driver retargeting generally isn't so important for migrations to VMWare since the emulated hardware is deliberately of a type that is widely supported and doesn't need specialized drivers, but it's definitely more useful for migrating from a VM to a physical machine.
For most editions of VMWare (ESX has limitations), Ghost can actually image both from a physical disk directly to a VMDK and back again as well as use the normal (non-runnable) .GHO image format, so virtualization isn't one-way. If you need to go physical->virtual for a while, that's fine, and you can generally go virtual->physical as well if you change your mind. Even if you do prefer to use VMware's tools to do the physical->virtual migration (and as a poster above mentions, those are excellent and mature), ours can still help you not only go the other way, but make life easier in a few awkward corner cases if you get stuck with a non-runnable physical machine (for instance after a motherboard failure, Ghost can P2V the physical hard disk for you).
The above will also apply fully to ESX at some point, but ESX is a little unusual in the VMWare family, and the internals of their virtual disk format are subtly different than the other products - not greatly, but enough to cause Ghost problems. Right this second getting ESX support fully to the same level as we have for VMWare Workstation is something we're still working on.
Full disclosure: I work for Symantec on Ghost.
Part of the "win" of virtualization absolutely is abstraction away from physical hardware. "Ghost" is a disk-duplication product, and while there have been "advances" made in various disk-dupe products creating images that are exhibit a degree of hardware-agnosticism, migrating virtual machines between hosts running the same hypervisor will provide no indication to the virtualized guest OS that any underlying change has occurred (the guest OS is living in "the Matrix").
I disagree with the "Dell server tech" making the statement that virtualization isn't a "valid" way to abstract operating system configurations away from hardware. If you were thinking about dedicating a single physical machine to each VM then I'd question the efficiency of the solution. (I'd think that he'd want you to buy as many physical boxes as he could get you to buy, anyway! I can't imagine why he'd talk you out of that... >smile<)
It's not a particularly valid use for virtualisation and you'd be better off using something like Ghost - :)
Seriously though virtualisation can do this for you but is likely to take as much effort as Ghosting will in the long run.
Actually, one of the steps of the process of migrating a physical server to a virtual one, is taking an image of the hard-drive of the physical system and restoring it onto a virtual hard-drive.
Although it can definitely be done manually (I've done it a couple of times before), I'd suggest using the tools supplied with VMWare to do that for you. They will also take care of the other steps involved in virtualizing a physical server, and they are really mature by now (when I've done the manual migration, it was because the tools were too expensive or not mature enough at that time).