Web Application Infrastructure for continuous integration - How many servers?

We're currently a small team of 3 developers and want to move to a new set up for deploying, testing and hosting our web applications.

Our current set up is:

Version Control Server (1) - We're using SVN on this server.

Web Server (2) - Used for testing/demoing new functionality to clients.

Web Server (3) - Hosts 5 ASP.NET web applications (10k users daily)

Web Server (4) - Failover server for web applications

Database Server (5) - MS SQL Server

Database Failover Server (6) - MS SQL Server

So thats 6 servers we have in total.

The team use Visual Studio on our local machines for development and also test locally only. When a build is ready we publish from one our developer machines and FTP to the test web server before then also publishing to the live web server.

How does this set up look?

We are now looking at TeamCity for versionControl, testing and CI. We intend to set up a new server. Hopefully to replace 1 and 2 above. I have a few questions...

1. How many servers do we need!?

2. Is TeamCity supposed be be installed on its own server?

3. Does anything need installed on the developer machines?

4. Can my testing server also be my TeamCity server?