We have 3 identical HP DL380 G5 server here, one of them is running vmware-server with one VM running on it.
I've begun the process to migrate these systems to be running ESXi (the $0, "embedded" system); two of the physical machines will have %99.99 of the time exactly 1 VM, the other will have 2.
For this, the major advantage I get Disaster Recovery ability. Our tape backup system doesn't have a "bare metal" ability. I can manually copy VM images to a different server, however. Even if they are months old, they provide pretty-close-to-instant up, further recovery they would be from tape.
Being the free version, I don't get the VMWare "consolidated backup" or VMotion. And I need to do per-physical machine management. But the ESXi takes 32MB of disk, and it specifically supports the server.
With that in mind, is there any reason not to always use ESXi, if the hardware supports it? Even if you only are planning on running 1 VM on that hardware?