HW upgrade recommendations for a PE 1850 rack mount

Hi all,

I need more disk space on a rack mount PE1850. Currently the server has raid1 mirrored hot swappable 73GB 10k rpm HDs, 2gb ram in 4 slots, and a Xeon 3.2GHz chip.

Question: Is my only option to upgrade the HDs to the Dell 146GB 15K RPM 80-pin SCSI U320 3.5-in HotPlug Hard Drive, Cust. Kit that show up when I put in my service tag for HD upgrades?

This PE1850 has been great as an SBS 2003 server for 5 users but now I'd like to make it a virtual server host for two virtual server machines. Unless wiser heads tell me it's not worth it.. As a virtual host, it would host the SBS machine and also a Server 2003 running a SQL Server 2005 app. I know I can move the contents of the original SBS server using my backup imaging software.

I would also pump up the RAM.

TIA,

Ray