There are three products that are part of the Nehalem microarchitecture currently: Core i7, Xeon 3500 and Xeon 5500.
Core i7 = High-end Desktop Nehalem
Xeon 3500 = Adds optional ECC memory support [Targeted for workstations]
Xeon 5500 = Adds support for 2 CPUs [Targeted for dual CPU servers & workstations]
At the same MHz, all these CPUs will perform exactly the same. If you want the fastest and most flexible (for overclocking) CPU for desktop use, select the forthcoming Core i7 975 "Extreme Edition" CPU or the Xeon 3570. They will both work on the same exact motherboard, even though most won't bother advertising they accept the Xeon 3500 version.
Using a dual xeon configuration would also give you 2 memory controller which can access twice as much memory as a single xeon 3500 or core i7.
The initial intel motherboard for the new xeons support up to 96GB of memory. May not be necessary for your average user but some people have a real need for it. I guess its only a matter of time before 16GB ddr3 memory dimms become widespread which will increase these configurations to use up to 192GB of memory.
Thanks for the information, with that being said about the xeon and i7, with the i7 being more flexible for desktop overclocking. Can the xeon w3540 use memory other than specified on this site which i think it said 1066. I was thinking of purchasing a xeon w3540 and wasnt sure if i had to run pc3-1066 or can i use pc3-1280. Thank you for your time and knowledge.
Yes, you can use higher speed memory. Of course, setting it to use over 1066 MHz (DDR3-800) is technically overlocking the W3540 memory controller. I assume you actually mean 1600 Mhz (DDR3-12800) sticks, right? That's generally a good choice for price/performance, and gives you a decent overclocking buffer.
Do note that chasing MHz for RAM is fairly pointless for real world performance with this excellent architecture. It performs exceptionally well at stock or near stock speeds.