Conventional wisdom has it that if you want to make use of "the cloud," you've got to use someone else's service -- Amazon's EC2, Google's clouds, and so on. Canonical, through its new edition of Ubuntu Server, has set out to change all that. Instead of using someone else's cloud, it's now possible to set up your own cloud -- to create your own elastic computing environment, run your own applications on it, and even connect it to Amazon EC2 and migrate it outwards if need be.
A DIY Private Cloud
Ubuntu Enterprise Cloud, or UEC for short, lets you create your own cloud computing infrastructure with nothing more than whatever commodity hardware you've got that already runs Ubuntu Server. It's an implementation of the Eucalyptus cloud-computing architecture, which is interface-compatible with Amazon's own cloud system, but could, in theory, support interfaces for any number of cloud providers. Since Amazon's APIs and cloud systems are broadly used and familiar to most people who've done work with the cloud, it makes sense to start by offering what people already know.
A UEC setup consists of a front-end computer -- a "controller" -- and one or more "node" systems. The nodes use either KVM or Xen virtualization technology, your choice, to run one or more system images. Xen was the original virtualization technology with KVM a recent addition, but that doesn't mean one is being deprecated in favor of the other. If you're a developer for either environment, or you simply have more proficiency in KVM vs. Xen (or vice versa), your skills will come in handy either way.
Keep in mind you can't just use any old OS image, or any old Linux image for that matter. It has to be specially prepared for use in UEC. As of this writing Canonical has provided a few basic system images that ought to cover the most common usage or deployment scenarios.
Note also that the hardware you use needs to meet certain standards. Each of the node computers needs to be able to perform hardware-accelerated virtualization via the Intel VT spec. (If you're not sure, ZDNet columnist Ed Bott has compiled a helpful shirt-pocket list of recent Intel CPUs that support VT. The node controller does not need to be VT-enabled, but it helps. In both cases, a 64-bit system is strongly recommended. Both nodes and node controller should be dedicated systems: they should not be used for any other functionality.