This post would of been more relevant a few months ago but earlier this year I was sent a link for HotUKDeals, there was an offer going to buy a HP ProLiant G7 N54L MicroServer for £97.94 (£263.94 with £166 cash back). The deal is now expired but can be found here anyway.
This is a nifty little server for the price; 2.2GHz AMD Turion™ II Neo N54L dual-core CPU, 2GB DDR3 ECC RAM, 250GB HD and 150w PSU. The great thing is the CPU includes support for virtualisation through AMD-V, allowing you to run fully-virtualised guests within bare-metal hypervisors like Xen.
The N54L states 8GB is the maximum amount of RAM supported, however after a bit of researching I came across a few articles claiming that 16GB is possible. I can confirm that my MicroServer is running 16GB. Amazon sell Kingston 16GB (2x8GB) DDR3 1333Mhz with ECC support for £119.56 at the time of writing, the link for Amazon UK can be found here