Well you don't clearly state what you wish to accomplish nor how much money you have so it is hard to answer. But maybe such setup will be OK.
Build yourself custom PCs.
Storage server:
- good and big enclosure which can fit large ammount of drives
- moderate 64bit AMD processor (really any - you will not be doing any serious processing on storage server)
- any ammount of RAM (really 1 or 2 gigs will be enough)
- mobo with good SATA AHCI support (for RAID) and NIC (any - for management) onboard
- one 1Gb PCI-* NIC with two ports
- 6x SATA2 NCQ HDD (any size you need) dedicated for working in RAID - software based (dmraid) RAID1+0 array configuration
Virtualization servers (2 or more):
- you need the virtualization servers to have the same config
- any decent enclosure you can get
- the fastest 64bit AMD processor you can get preferably tri or quad core (it will do the processing for guests) with VT extensions
- as much RAM as you can get/fit into the machine
- mobo with VT support, one (any - for management) NIC onboard
- one 1Gb PCI-* NIC with two ports
- one moderate SATA disk for local storage (you will be using it just to boot the hypervisor) or disk-on-chip module
Network switch and cables:
- any managed 1Gb switch with VLAN and EtherChannel support, HP are quite good and not as expensive as Cisco
- good CAT6 FTP patchcords
General notes for hardware:
- make sure all of the PC hardware is *well* supported by Linux since you will be using Linux :)
- if you can get better (quality wise) components, good enclosures, power supplies, drives etc. - since it is a semi server setup you don't like it to fail for some stupid reason
Network setup:
- make two VLANS - one for storage, other for management
- plug onboard NICs into management VLAN
- plug HBA NICs into storage VLAN
- configure ports for EtherChannel and use bonding on your machines for greater throughput
Software used:
- for storage server just use Linux
- for virtualization servers use Citrix XenServer5 (it is free, has nice management options, supports shared storage and live motion) or vanilla Xen on Linux, don't bother with VMWare Server, VMware ESX and Microsoft solutions are expensive
Storage server setup:
- install any Linux distro you like (CentOS would not be a bad choice)
- use 64bit version
- use dmraid for RAID and LVM for volume management
- share your storage via iSCSI (iSCSI Enterprise Target is in my opinion best choice)
Virtualization servers setup:
- install XenServer5 (or any distro with Xen - CentOS won't be bad)
- use interface bonding
- dont use local storage for VMs - use storage network instead
Well here it is. Quite powerfull and cheap virtualization solution for you.