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What linux distro to use for minimal virtual guest machines?

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I had been in the habit of running certain services in a minimal virtual machine on Ubuntu Server, and i used Ubuntu Server for the guest OS as well. Now with Xenial it puts LXC/LXD on every system, which clearly makes Ubuntu Server unsuitable for use a guest operating system. It also no longer fits on a 2GB virtual disk.

I know containers are the the thing and in fact I'm using Docker for almost everything these days but for some things I still need a virtual server. What should I use?

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