After a bit of advice on planning the primary server deployment.

I have the option of using either virtual hardware (VMWare) or physical servers. The primary servers will be housed in 3 datacentres which are all separated by 100MB links and are close to the users.

I will have one primary server in each datacentre for fail over but can't decide on if I should use physical or virtual hardware. Each site will have approximately 400 users and I will be using satellite servers as well when needed.

Does anyone have any advice on which would be a better choice as I'll need to justify my reasons either way, or if someone has some stories to tell of why they went either way?

Virtual would be a good idea for the flexibility it gives, but physical has benefits as well as it's not sharing resources etc.