The X34xx, W35xx, W36xx, (E/X/W)55xx, (E/X)56xx and E3-xxxx processors generally support hyperthreading.

The main difference between an i7 and a xeon is the fact that xeons support ECC memory (see below) and dual-processor configurations, also they often support larger amounts of memory.

ECC (error correcting code) is a memory feature, it allows your memory to detect and fix small errors. May not sound very important because, after all, your desktop doesn't have it and runs fine, right? But it is an extremely important thing to have on servers for maximum reliability and stability.

These hosts which sell i7's (and therefore don't have ECC) do so because an i7-based system is often cheaper to build. Reason being, ECC RAM costs more, as do the motherboards and processors which support it.

If you can get a cheap i7-based server, go ahead if its really worth it. But if you can get a xeon for the same price or a little more, I would recommend you get that instead.

Also you might want to note that any intel processor containing the letter 'L' in the model number is more than likely a low-power model. Meaning it will run at a lower clock and such, to save power and increase efficiency (so it will likely be slower).