VMware ESX is a full hypervisor that can be a host for nearly any x86 based guest operating system. ESX has also been around for many years and is proven technology that is production-ready for both Linux and Windows enviroments.
Citrix XenServer is a hypervisor that uses paravirtualization. This means that the guest operating system needs to be modified in order to function properly. Since the guest OS modifications are only available for certain POSIX based OSes including Linux you're basically limited to NOT running any Windows servers under Xen. Also Xen has not been in this segment of the virutalization marketplace as long as VMware, although Xen is extensively used for virtualized production Linux enviroments.
And although you didn't mention it, basically Microsoft's Hyper-V product is a not-quite-full hypervisor that is brand new to market. It doesn't have nearly as robust of feature sets as ESX or Xen and it's from Microsoft. From past experience with various other first generation MS product offerings I'd shy away from this as an option.
That being said I'm also at a small SMB with 15-20 servers that were recently all physical. We went with a VMware Enterprise Midsize license, 2 HP DL380 G5 servers with 20GB RAM each, and a NetApp FAS2020a SAN/Filer and couldn't be happier.
