I've tried a few options such as ESXi, but if I remember correctly, it complained about my CPU not having support for virtual machines (it is an Atom after all).
Also there's another caveat, the server OS (Debian Linux) currently runs off a USB flash drive with an eSATA hard drive for storage. Is it advisable to install a virtual server on a USB stick? This is only for fun, after all. Obviously the virtual machines themselves would be on the eSATA hard drive.
I think I also tried VMware Server 2, but this also complained about lack of virtual support on my CPU (or am I remembering incorrectly?).
I'm also considering LVS and Linux-VServer, but I tried those in the past and got nowhere fast; not because of hardware issues, but because it seemed very involved and I wasn't really sure if it was the right platform.
Update: I should also add that the machine is headless.