I always recommend the use of virtualization, no matter how small the installation. VMware ESXi is completely free of charge, performs very well, and is easy to set up. Most importantly this gives you the option to create snapshots before updating your installation, making recovery from catastrophic updates much easier than restoring from backup, should that ever happen. Moving to different hardware is generally easier, too.
Backups are a must, of course, but not using virtualization is almost as shortsighted in my opinion & experience.