Last year I did a series of entries on the opportunity to avoid brick and mortar ( or steel and drywall in most cases ) data center expansion. The math was pretty compelling. If you have depreciated enterprise servers in production, and at 10% utilization today, and the current "state of the art" Xeon servers will easily give you 5x or more performance gain. In this scenario, you can get 50x the capacity in the same space and power. My formula was pretty conservative - 5x performance, 5x utilization with virtualization, and 2x the rack density by measuring actual power and using high efficiency designs.
Intel's Core i-7 variant for Xeon ( code named Nehalem) only enhances this opportunity. The Xeon 5500 series processor launches in March 2009, and although performance benchmarks are still pretty scarce, the buzz in the industry is that this is the biggest leap in Intel Xeon performance in many years.
Consider the impact - if this processor doubles current Xeon 5400 performance, that could yield 100x the compute capacity in the same footprint and power. Before you get out the sledge hammer you really should evaluate server refresh. An aggressive server refresh with state of the art Intel Xeon based systems can deliver the performance and capacity for business needs, AND avoid capital data center expansion. In this economy, avoiding real estate expansion should make you a hero at work.
If this is not enough, take a look at optimizing your cooling ratio. see whitepaper_energy efficiency in the data center.pdf or Reducing Data Center Cost with an Air Economizer. This could give you another few thousand watts per rack, to increase density and push your multipliers even higher.