Currently, with the creation of open source software, creating a dedicated server or more than one virtual servers on one machine is possible.
Free open source software to create one or more hardware private virtual servers on one machine:
Free software to create one or more application private virtual servers within an Operating System (OS)
- Sun’s (Oracle’s) VirtualBox – http://www.virtualbox.org/
- Microsoft’s VirtualPC – http://www.microsoft.com/windows/virtual-pc/
- VMWare’s VMware player – http://www.vmware.com/products/player/overview.html
The complete list of free and commercial paid virtual servers can be seen at http://en.wikipedia.org/wiki/Virtual_machine#List_of_virtual_machine_software. I only listed the ones that, I assume, are well known, free and widely used.