best way to upgrade from SBS 2003 to SBS 2011 using same server

Actually, I agree with Cliff on this - Momentary brain fart on me.  In general, I like to point out that the server runs the business.  It fails, your employees are sitting there idle.  A workstation fails, ONE employee is idle and you could bring a personal laptop in or even rent a computer for a few days until you get it repaired/replaced... but the server is CRITICAL to business functionality.  In my opinion, servers should be covered by 24x7 warranties with 4 hour on-site response for 3 years.  At the end of the 3 years, they should be replaced (warranties beyond 3 years are usually VERY expensive and I have difficulty justifying the cost compared to a new server).  While the server should be replaced after 3 years, you COULD repurpose it for a less important or redundant role.  If you have appropriate licenses, you could turn it into a backup server or get some shared storage and create a VM Cluster to increase up-time... there are options, but at the end of the day, I agree - 4 year old server should be replaced.  Or your client should EXPECT days of business interruption when a failure occurs - and it WILL occur... these things don't run forever.

Thanks for the quick and comprehensive responses guys.

It is of course all down to cost and timings  !

If we go ahead with the upgrade using the same machine - how easy would it be to move the whole virtual machine across to a new server in the future ?

The beauty of vitualization is moving a virtual machine from one physical server to another is almost as simple as copying the file. export, then import.

Thanks for your help.