High availability used to be expensive, requiring both specialized software and redundant hardware. Today it almost grows on trees, but you need two key ingredients: virtualization and network storage. By creating a virtual server farm across multiple physical servers, and storing all of your virtual machines on a central SAN or NAS, you can ensure that the failure of any given piece of physical hardware will not bring down your virtual environment.
We recently created a highly available virtual server cluster based on the free edition of Citrix XenServer; this article outlines the process step by step. Although the obvious choice for any enterprise-grade virtualization deployment is VMware vSphere, I chose XenServer for two reasons. First, we're cheap. We don't like spending money on things that we can get for free. Second, and more important, the licensing of VMware is extremely confusing; we're never sure what exactly is required to be properly licensed. (I guess this also amounts to being cheap. We always feel that we are being overcharged for items we aren't fully utilizing.)
It should be mentioned that there are many different flavors of Xen available. Just about any version of Linux includes a Xen implementation. The version discussed here is not "pure" open source Xen, but XenServer, the commercial bare-metal hypervisor originally developed by XenSource, which was subsequently purchased by Citrix. The version of XenServer we used was the latest available at the time, 5.6.0.
Aside from the cost and licensing issues, the primary reasons to implement a virtual server farm on XenServer are the same as for using any other virtualization suite: