I've got a dual xeon e5504 server, with [for now] only 8GB of ram. Storage is'n impressive either: 3x 146GB sas in raid5 + 500GB sata drives. Currently it works as a development server, but it's over speced for our needs and since our development methods changed through last 2 years we decided it will work as a production system for some of our applications + we would like to have a separate system for testing/research. Our apps are mainly web apps deployed on tomcats [plural as some of the apps require older versions] and connected to Postgres.

I would like to have a production system, where only httpd+tomcat+db are setup and nothing else runs there. Sterile system. Apart from that, I would like a test system, where I can play with different JVM settings, deploy my test apps, play with tomcat/httpd settings and restart them without interfering with the production system.

Apart from that, I would like to be able to play with different linux flavors, with newer kernels to test how they work etc. I know, this is not possible with OpenVZ and I would have to choose KVM for that. I am thinking about merging the two, and setting up a KVM to be able to work with different systems [linux only to be frank] + use openVZ to setup separate machines for my development needs. I would simply go with that, but reading here and there about the performance impact full virtualization has over containers and looking at the specs of my server makes me think twice about it. I don't want to loose too much performance, especially because of the nature of my apps [few JVMs running at the same time].

It will be my first time with virtualization, apart from using desktop virtualbox/vmserver. Although I am a fast learner I don't want to mess with the main system so much that it will break the production apps or make them crawl. Although they are more or less internal apps and they don't produce much load, they need to be stable.

I've read, that KVM host is a normal linux installation and it allows to run normal processes on it. If that is so, does it allow to run openVZ as well? I mean... can I have KVM and OpenVZ running on the same system/kernel? Or do I have to setup another system to run OpenVZ containers? How much performance impact can this have for me? Will my hardware suffice?

oh and one more thing... unfortunately I'm quite limited with the funds... I'm looking for a free solution only :/