Purchase either 1 or 2 (for clustery redundancy) Xen hosts to replace dodgy old x86 PCs in the machine room.
Machines to run as a Xen:
- coolstore (currently a Xen on mermaid?)
- possibly some of the other colo machines
There are a few possibilities for hardware. Nice Core2Duo machines can be purchased for around $1500. Sun Opteron servers are also not too ridiculously overpriced. e.g. a Sun x2200 with 2x dual core Opterons can be had for around $2500. They also have education pricing.