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I'm looking to put together a server with the base OS as Windows Server 2008 with Hyper V. This machine is a development box that will be hosting multiple VMs for development - test instances of various Microsoft flavors as well as a Team Foundation Server VM.

I want the machine to have raid 5 across 4 1 TB drives. I'm not concerned with the "lesser performance" of Raid5. Other's have said raid 5 in a VM environment works just fine. Besides, this isn't an azure server. It's a development VM server.

My question is, what should I be aware of when picking out the hardware for this box? Do any of you who have built similar setups have any suggestions or considerations that I should be aware of?

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Above all else since you mentioned this is going to be a Dev server you should know not to experience the same performance as a physical server when it comes to SQL (not sure about Oracle). You can find documentation that will tell you that it is possible to get near native (92-96% performance) and that may be possible but in my experience you will usually see closer to 80% of what you would see physical, in terms of both capacity and end user experience from an application perspective.

As a general rule I would consider how many guests you plan on running utilizing more than 1 Virtual Processor and or more than 1/2 GB of memory. Utilizing more is perfectly acceptable, but running 8 single core VMs on an 8 core box is not the same as running4 2 core boxes because of the way virtual resources are handed out. In my personal experience it seems we always underestimate the amount of memory we are going to want in a virtual server, we started with 64GB in each of our virtual hosts, only to upgrade to 128GB and no several of our servers we are still wishing for more.

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Thanks for your input, Charles. We are probably only going to have a handful of VM's, but you know how it goes. You say you'll only need 4 VM's and next week you need 8. At other places I have experienced the slower Sql Server, but luckily we have a machine outside this one that acts as our development sql server/web server. I'm looking to add a domain controller (in the base OS), a TFS server, and test machines. Thanks again for your wisdom. –  Josh Dec 9 '10 at 22:15
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It should also be noted that several vendors make some good tools for doing some baseline analysis of how the load you are planning on implementing should be hosted. VMware for example has their capacity planner, vmware.com/products/capacity-planner but I am sure there are some less robust tools you could probably pick with less cost that could give you a more accurate assessment of your need. It's one of those things that is hard to estimate without fully understanding the load you are going to put on. –  Charles Dec 9 '10 at 22:34
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