Home Network Help with 3 VM clients

I have some projects I need to work on for the kids. Im looking to Build a Windows Home Server 2011, to use as a NAS also to Store all my Kids stuff. Also to Stream Movies, and Pics to all the TV's in the house that have Media players.

My question is, I need to get at lest two desktops for the kids for the computer room. Can Windows Home Server 2011 support virtual Machines?
Or some kind of Thin Client? I have 2 extra Monitors and keyboards, I would like to just run windows 7 on some kind of thin client and have all their stuff saved on the sever.

That way if they screw sometime up I can just wipe the VM clean and give them a fresh one. This way I can spend money on a Great home Sever to stream media and store Data. Other wise if i have to build some desktops it will eat into my budget. Anyone have any ideas? I been searching around but cant really find any guides or tips on the internet for what am looking for.

Thanks.
Pawn