If your PowerEdge 1700 Model number is correct, the system is about two generation old and does not support Hardware virtualization. that means you will get about 30% hit on the VM perform. PowerEdge 1700 (1750?) Raw Metal would be just fine for Zimbra Server. Don't virtualize for the sak of virtualize. Direct Attached storage can be flexible too, search the forums for putting the file system on LVM partition. NFS is not recommended for Zimbra at all (mainly due to the MySQL and LDAP Database) see
Performance_Tuning_Guidelines.
If you want a virtualized storage environment, you will need the infrastructure to support it. A true SAN over FC or at least an storage system with iSCSI support over Gigabit networks.
But by the number of the mailbox and storage, I would go with bigger 64-bit systems and multiple servers.