So the functionalities I am looking for are in order of importance: Virtual Machines, Photoshop, Video Editing, Gaming.
I play with a lot of systems sometimes and having the capability of hosting 3/4 VMs during my dev time is a must. Also I will be using it for photo video editing and possibly some gaming ( i like first person shooter kind of games).
Budget is around 1k. I do not need monitors and other accessories.
Thinking of Intel Quad cores (not sure what i7 has to offer in virtualization). And lots of RAM (8GB DDR3).
This system will allow me to run as many virtual machines as I have resources/licenses for (XP/Vista/Server 2003/linux). I should be able to have three or four client systems running concurrently or two client systems and one SQL server running concurrently without issue.
The intent was to build a development platform and use Server 2008's Hyper-V role to allow me to game on a XP or Vista virtual machine. This was not to be, however, as the virtual machines used an integrated service bus for graphic displays. That's just not going to cut it for gaming, so I'm looking at refining the build for a dual boot system; either XP, Vista or Windows 7 and Server 2008.
I'd probably recommend going that route if you're wanting to game and develop on one physical system.
if i do recall, AMD Opteron processors seemed to be the King of virtualization. I'm not sure how much better they are than Intel's offerings, but something you may want to check out. And being a server-based solution, it would be easy to have tons of RAM. However, not sure it would be easy to fit it into a budget of 1K.