Question : Advice on upgrading a SBS 2003 R1 server

Have a customer with SBS 2003 Std, ML350G4 with 3 SATA 10K RAID5 (only physical volume), 3.5GB usable RAM, (2) dual-core Xeon 3.2Ghz CPU, runs Exchange and 6 instances of SQLExpress 2005 (2 for SBS purposes).
Customer says too slow - now 4 yrs old.  Has 12 users and recently started REALLY using one SQL app.
Questions for replacement:
OBVIOUS SPECS:
ML350G6, (2) Quad-core Xeon, 8GB RAM, SBS 2008, SAS mirror for OS/Databases, SATA mirror for storage
Questions
- to go with SBS Premium to get full SQL (not sure if all current SQL databases will or can use)
- to install SQL 2008 (from SBS) on a separate server for only 12 users (huge extra expense)

Any advice on this?

Answer : Advice on upgrading a SBS 2003 R1 server

I definitely recommend putting SQL on a separate server from Exchange. There is just too much resource contention otherwise. With only 12 users, you can actually get two lower powered servers for less than it'd cost to get one large server to run everything under one roof.  It is server 2008 though, so RAM is important no matter how many (or how few) users you have.