If you want a virtual environment, witch in my experience is really easy to administer, you need some sort of SAN or iSCSI environment. Then you have a base for attaching the needed computing power to this storage solution. It will be costly to start up, mostly be course of the rather powerful switches you need to get. Those are easy 10K a piece.
We just set up a brand new virtual environment at my work (university it department serving about 5k people), the trick is really to get the infrastructure in place, network connectivity, and backbone/power redundancy etc. Then we are adding R710 Dell boxes, with 50GB ram(we are upgrading all 5 of them to 128GB next year) and 2x Quad core Xeons, those are cheap, only about 7k a piece. The processing power of those new Nahelem Xeons are awesome! Can definitely recommend.
For a not to expensive SAN i would recommend Dell's Equilogic boxes, they have all the new features, while being robust and built redundant (2 storage controllers, psu's etc), the basic box with 40TB is about 70k.
Since the main concern in my eyes are your aging hardware, you need to migrate one way or the other. Maybe just P2V'ing the old stuff to a vm is not desirable, if you need to update all software. Otherwise it is a easy way to move your old server in a convenient and safe way.
good luck.
