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Essentially, 2003 is based on XP and 2008 is based on Vista. 2008 also allows read-only domain controllers, improved WDS functionality, better version of IIS, Hyper-V virtualization (which isn't as good as VMware) and includes a command-line only verion. However, 2008 requires a far more powerful system and 2003 is easier to learn for people new to server OS's.
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