I wouldn't bother upgrading the motherboard or processors until you have been running it to capacity and found it slow.
You should put in as much memory as it will take (16GB or 32GB depending on model) but see this link for supported memory configurations.
Have you considered installing vmware ESXi ? Version 3 will work, version 4 may work, version 5 may not, but it's free.
This will give you the option of running any guest operating system.
Make sure you have the HP smartstart CD from
This machine has an iLo port for remote management, you have to press F8 on boot to configure it
Phil