I'm using KVM on my 12.1 system with good results in testing and am about to start using it as my live system replacing a stand-alone firewall system (SmoothWall on an old Dell GX-100) in one VM and consolidating several other functions (FTP space, NFS, SAMBA shares, UPS monitor server, IP scanner server) cutting down the numner of systems I have to keep running and maintained.

The firewall was an interesting install and I discovered several limitations in my hardware (Dell T-310 and Intel multi-port NIC) that needed worked around. When directly assigning a PCI device like a NIC you can't always assign the individual ports to different VMs, it turns out my Intel NIC (82576) has a single reset line so both ports must go to the same VM. Same for the BCM5716 motherboard NICs so I had to add a second NIC (Intel 82574l) to use for the server's connection. For the firewall ports direct hardware assignment appears to be the safest from a security standpoint, for the server VM a bridged setup would probably be safe enough but since I had a slot and a card available I used it anyway. I've assigned one of the motherboard NICs to the host system and bridged the other to use for any additional VMs I add later.

The basic services on the server VM and firewall VM all work exactly as they would on a non-vm machine so there were no surprises there. I do wish I'd gotten a quad NIC for the firewall so I could add a wireless zone and a DMZ later so a card upgrade may be in my future.

I'm fooling with different options to see just how much memory they use, so far I'm not having any issues in testing with 4 GB on the host but keeping it down gives more room for disk buffers. Keeping power use down is another area I'm poking at to see what can be done to minimize that.

I have been using VNC as well as the VMM manager on remote systems with good results which is handy as I don't intend to keep a keyboard/mouse/monitor attached to the host box once it is working and stable. Might pull the NVIDIA card at that point to save a few watts.

The basic setup is:

Dell T-310
Xeon quad 3440 (lowest end one with the IO-MMU needed for direct PCI hardware assignment)
4 GB DDR3 RAM
128 GB SSD (host and VM space)
1 TB WD green drive for server VM's storage space (backups, photo collection, archived files, shared scratch space)
250 GB WD green drive for music collection (SAMBA shared to a Sonos system)
Intel dual port nic for SmoothWall firewall
Intel single port NIC for Server VM]
Dual onboard NICs for host and bridged
Video Nvidia GF-8400 fanless / low-power (since onboard video wasn't DVI)

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The original Dell drive is installed but unplugged,, keeping it pristine along with all the Dell apps for maintaining the basic hardware which is turning out to be a real pain due to all the management stuff Dell has built into the system. Supposedly you can run them from a live CD Dell included but that has been less than successful for me. The Dell system monitor hardware also makes cold-booting from a power-off state an aggravating, slow process and so far nobody at Dell has had a way to get it turned off. If Dell hadn't had a killer price on the system I'd have gone with a Linux vendor for a similar system without all the worthless to me monitor hardware.