In a business environment, you have to CYA.
IF... if you are the one responsible for choosing between a Xeon and the consumer line Core 2/Core i7, and you choose the consumer line, and
IF... if there were EVER a problem whic cost the company time/money and could
possibly have been caused by the processor for whatever reason which may not have anything to do with whether it was a Xeon or a consumer model...
That would certainly not look good on your annual performance evaluation.
Like they used to say, "nobody ever got fired for buying an IBM." Or something like that.
So why do people pay extra for them vs. Core CPUs?
I didn't. My Xeon E3110 was CHEAPER than the equivalent Core 2 Duo E8400 at launch.
A while ago when I met with Intel they stated the Xeon chip comes from a certain part of the wafer known to have less defects. I forgot if that is the middle or side *shrug*.
IIRC the cherry part of the wafer is the center.