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At the same price of a Xeon box, i can buy 2 or 3 AMD desktops with better overall performance, and of coz, reliability thru load balacing & backup...
Desktop form factor could be a problem, depending on your host. Even if they will accept them, you will have to have a need for, say, 3 servers (as it seems you may have?) to justify the cost of the rack space. (I'm assuming that 2-3 will fit side by side in a rack on a shelf.) And you are still going to be paying more (perhaps MUCH more) for rackspace, because desktop machines are less densely packaged.
If this is in your own data center, this may not be a problem. But don't expect your IT people to be happy about it.
You didn't mention what you've been buying for servers? Name brand? IBM? Dell? Well, IBM is my preference, as they build them like tanks. But if you don't see the value proposition in that, your local independent computer store, or lots of outfits on the web - can stuff desktop components into a rack-mount case as easily as they can in a tower (well, almost as easily) and save you some money.
I think you need to do your comparison carefully, and first determine just what your needs are. Dual and quad-core chips change everything, but perhaps not in the way you might think.
Although there are slight tweaks here and there, (that really don't add-up to a hill of beans) the main difference between desktop chips and server chips is that manufacturers can use the server chips to create multi-socket designs.
So, how many cores do you really need? Let's say, you decide you need 8. So, you go out and buy 4 cheap desktop machines with X2 or Core 2 Duo, and you've saved money, right?
Maybe. What's 1/2 rack to hold those 4 boxes going to cost monthly? What's the cost when the cheap power supply in one of the machines fails and takes your database with it?
Alternately, you can get a 4-socket, dual-core server that will put the same thing in 1U or 2U of rackspace, with reliabile components that are less likely to fail.
I'd suggest starting by updating yourself on current CPU chips. I think it's odd you would suggest replacing Xeons with X2s, since Intel seems to currently be in first place in the game of leapfrog that they play with AMD. (With Core 2 Duo - cheaper/faster). That could change tomorrow, of course. I have an X2 machine at home running Linux that I'm very happy with, but when I bought it, AMD was on top. I'd buy Core 2 Duo today.