Do I need VMWare vSphere?

Solution 1:

There are three components you need to consider;

1. ESX Licences - ESXi (not ESX) is free but limited when free, you can't give VMs the full 8 vCPUs, don't have HA, FT or DRS functionality etc. but it works just fine with or without shared storage. If you want these functions it's going to cost.
2. vCenter - this management software costs but is the only way to make two or more ESX/i hosts work together to provide HA, FT, have DRS functionality etc. Note that the ability to live migrate guest VMs from host to host requires shared storage.
3. Shared storage - without this you can't live migrate from host to host or support HA.

So really it comes down to your downtime requirements, if you NEED HA, DRS, vMotion, FT to increase your service uptime then you need ESX licences, a vCenter licence and shared storage. If you don't need these functions you don't need any of these extra-cost items.

Oh and there are free backup solutions for unlicenced hosts, such as GhettoVCB.

Solution 2:

You could start with ESXi free. If HA (High Availability) is required you can purchase vSphere Essential Plus license that enables you to use up to 3 hosts (physical servers), with no more than two CPU with no more than 6 core per CPU.

Of course, you need a vmware certified shared storage.

HA could be a good fault tolerant solution: if a physical server fails, all its virtual server reboot on the surviving server(s).