Single server vs multiple servers for multiple databases

We are purchasing two physical boxes; we will be carving out several LPARs
out of those two boxes for some applications like Financials, HR, etc.
Downtime for these applications will not be liked. We plan to cluster the
LPARs. All the applications are Peoplesoft applications. The database LPARs
are to be licensed in bulk as far as Oracle goes; that includes all the
production and dev servers. This is so that CPU cycles can be 'borrowed' if
needed. So CPU is not an issue here.
One of my colleagues suggests that we create one LPAR for all production
databases for all the applications and use different Oracle homes for
various databases. I see few shortcomings with this idea:

- Even though the applications may all start out same currently, in future
the applications may have to be patched differently which might require
different patching on the Operating system.

- If we have to do maintenance, including rebooting the server, that will
affect the availability of other databases too.

- If there is a runaway process with one application, this will affect other
applications as well. Also monitoring and isolating problems might be bit
easier with separate servers.

The pluses:

- Easier maintenance because of one server.

- anything else?

Can the listers share their thoughts on this.

Thanks.

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