You might want to check this link for the discussion on i7 vs xeon processor:
and this sample comparison of i7 and Xeon processor:
Based on the discussion and from your specification, Xeon processor is best suited for your tasks which will mainly do server duties/activities. Xeon processor has support for ECC memory and has advantage over larger L1/L2 cache. Aside from ECC support, Xeon also supports Intel® vPro Technology, Intel® Virtualization Technology for Directed I/O (VT-d) and Intel® Trusted Execution Technology which would definitely increase overall performance especially on virtualization.
So in my opinion, Xeon is the best way to go if you are into virtualization and server activities.
thanks, Im learning more about cpu architecture.. will be getting a e3-1270