If this is a Windows-centric network and the only skills on hand are Windows-based, then open source Xen might be out of the running. However, if any Linux skills -- or the desire to learn them -- are present, then Xen is a contender. It's important not to confuse open source Xen with Citrix's XenServer, which is a commercial offering based on the open source hypervisor. Citrix has recently released a cut-down version of the XenServer product for free, in an effort to compete with VMware ESXi and Microsoft Hyper-V.
The two VMware options, VMware Server and VMware ESXi, are fundamentally different platforms. VMware Server runs as a service on both Windows and Linux, dependent on the drivers and core of the underlying operating system to interface with the various components of the physical server, including the disk, network interfaces, CPU, and RAM. VMware ESXi runs on bare-metal hardware and does not require an underlying operating system.
VMware ESXi is a bit of a double-edged sword. It provides significantly better performance than VMware Server, but is harder to manage for a novice admin. Also, while VMware Server supports a wide range of hardware, ESXi does not. You'll need to make sure that the equipment you use is covered by ESXi's Hardware Compatibility Guide. This is critical, because ESXi will not function on unsupported hardware.
The benefits of VMware ESXi over VMware Server are many, however. By eliminating the underlying host OS, ESXi puts virtual servers closer to the underlying hardware. They will be faster and more responsive on ESXi than on VMware Server and other hosted solutions.
VMware Server installs on either Linux or Windows, and it runs as a service. There are no hardware restrictions with VMware Server as there are with VMware ESXi; it will run on any hardware that your Windows or Linux host supports. As mentioned above, however, this will negatively impact the performance of the virtual servers, but what you lose in performance you may gain in manageability.
Microsoft Hyper-V is much like VMware Server in function: It installs on a Windows server and uses the underlying OS to deal with the physical hardware. Of course, you must purchase a Windows Server 2008 license to use Hyper-V, and Hyper-V's support for Linux guest operating systems is weak, at best.
With this infrastructure, the first step is to determine which servers should be virtualized. The obvious candidates might be the Web server and one of the domain controllers. Good practice dictates that each Active Directory domain controller run on different hardware, as a hedge against a single point of failure. The file server might also be a prime candidate for virtualization as long as the host hardware can provide enough disk space to contain the files to be served.