Exchange migration best practice

Environment:

Dell Server w/ 4 GB of RAM & 4 core processor
OS : Sever 2008 standard 32 bit
-active direcory
-domain controller
-exchange 2007 (100 mailboxes, 70 GB storage database)
-file share (500 GB broadcasted to 18 domain desktops)
-print server (4 printers)



New server waiting to be deployed:
Xeon e5 2450 w/ 64 GB of ram

OS=  windows server 2008 r2 enterprise
-No roles



I have no more budget remaining and need to migrate the exchange database over to 2010 and then implement the new OWA.  

My questions are:

1. I have never conducted a migration before.  What precautions should I take and do you guys have any recommendations?
 
2. Can i run virtualization software on top of r2 enterprise and install a new copy of windows server?  anything free?

3. What are the essential components of this project to ensure a smooth process?