Dizzy,
You might want to talk to Wendell since he is in your neck of the woods, and has also been experimenting with virtualization.
We have done implementations for practices that want a local server so we took a beefy box, installed CentOS, installed a fresh AC server, as well as VMs for additional 'cloud' desktops that perform better than their aged desktops.
With enough internal disk and an inexpensive NAS, there are regular full images of the server, incremental DB backups, and images of the 'desktops', and the practice has multi-point redundancy. Takes more expertise, but completely 'doable'.
