I'm assuming these aren't installed in a rack? A blade certainly isn't the best choice. A blade server has to be installed in a blade chassis, which is quite large. A rack type server such a 2950 has a larger footprint than something like a 2900 (tower), but is physically smaller when you look at the overall dimensions. For its purpose, i don't know that i'd look at something smaller than the 2900, but i certainly wouldn't call it a space saver (quite the opposite). The smaller systems tend to be at the lower end.

You'll need to consider quiet a lot of things for the upgrade which you propose;

• Blades consume a lot more power than standard tower/rack systems - plus they do not have the standard "kettle" lead power cord, so you might need to do some rewiring!
• Upgrading from SBS to 2008 will mean that you will have to install several individual server roles, e.g. Exchange, Act Dir, DNS, Proxy, SQL, etc.
• If you only have tower systems at the moment, such as the PE2800, then selecting a blade centre or rack server will mean extra expense buying a rack.
• Dell don't support SBS on most rack mounted servers - only on some entry level systems.
• Blades cost more than rack or tower servers, but do over more scalability as you can just buy extra blades to put into the blade chassis.
• Blades are limited to 2 disks per blade, so might not suit for storage requirements

If I was in you position I would consider a PE2950 MLKIII with Quad Core Procs, plenty of RAM & ESX Server 3.5 - especially if you plan to shelf SBS!