Small Business and the short sited
The last company I worked for had a farm of about 75 Virtualized Servers. It saved the company a lot of money by allowing us to transition off of older platforms and consolidate rack space and power. As mentioned above because we ran our VM's from our SAN we rarely had any down time even in the event of hardware failure on a host node. For this company it was a great thing.
However, in small business and/or companies where non-technical management holds the check book and is most concerned with quarterly numbers; VM just doesn't add up to them. In these companies they would rather get a bottom of the top of the line server from Dell or HP that can be upgraded later if needed. As opposed to dropping the large investment required to purchase an ESX box capable hosting 10 VM's plus licensing. Not to mention the need to have failover capability and optimally a SAN. Moving to VM is an enterprise level upgrade.
Therefore, I would be curious to know what percentage of low end servers are purchased by small business vs. enterprise customers. If anything I think Dell and HP can depend on small business to maintain their demand for low end servers indefinitely. Small Business and the short sited are just not interested in making the upfront investment required to create a solid VM infrastructure.