I've considered Time Machine on an Xserve, but TM has been pretty buggy on our network. Weird random issues, like when trying to restore from a sparsebundle I get an error saying that the file is "unavailable" or that the password for the file is incorrect (it's not). It also seems to fail for no reason at all, and then work fine the next day. Today I was backing up a person with only 38GB on their drive, and TM said they had twice as much data as they actually did.
So yeah, I'm skeptical of TM in a business environment.