Either way, you can go with VMware 4 or Proxmox but VMware is more suited for virtualizing enterprise servers. For a normal home virtualization, ProxMox would be just the right solution for you.
Now the only issue with your current hardware is the CPU, out of box it does not support virtualization, so you will need to upgrade your CPU to one that supports virtualization.
http://www.firingsquad.com/hw/7000/AMD_Opteron_285_2.6GHz/
In terms of memory capacity, 8 gigs may be enough for now, but if you plan on running more than 3 VMs at once, consider upgrading it to 10gigs or 16 gigs. You will need to find out how much RAM your system supports.