IMO, use XEON because of prefer to use ECC memory. From statistics, there is about 1bit error per GB memory per month (due to cosmic radiation). That means, nowadays, on a 32G memory system, there is about 1bit error per day. If that bit is on the idle memory, then doesn't matter. If that happen in a game, may be crashed (or the whole system crash). The worst thing is that error bit hided somewhere and affect the final product of some work. And ECC memory can avoid this effectively.
Also, when there is some strange behaviour on the computer, ECC RAM can quickly allow the user determine if the problem is coming from memory (in real world, AFAIK, there is no undetected error with ECC memory).
Apart from this, XEON has almost no benefit over the i7. My computer runs 24/7 with 48G of RAM, so I prefer ECC memory. However, in general, for non-mission critical computer, non ECC RAM is good enough. Also, ECC RAM is more expensive and about 2% slower than normal memory.
XEON is not that picky in memory, normal PC RAM works, not necessary go for the server memory. I guess the reported memory issue is that some one mix the RDIMM with UDIMM. RDIMM is very common in the server world, and mix RDIMM with UDIMM will cause unable to boot. It's quite common some people buy extra 1 or 2 larger capacity stick, and mix use with the current smaller sticks. However, the larger capacity server memory stick mostly are RDIMM, and most PC memory are UDIMM. I won't say it's a common mistake, but easily happen with little bit careless, and the user may blame the XEON.
On the other hand, mix ECC with non ECC RAM is not an issue at all, ECC will be disabled on all memory, and the system should work as usual.
Without iGPU not just mean that you didn't have the spare GPU, but you can't use QuickSync. If you ever use your computer for video encoding, QuickSync can save you lots of time (under some specific condition, e.g. only work on single pass encoding). Also, the coming DirectX 12 game may able to use the iGPU to assist the dGPU. Even though DirectX 12 is not common now, but if you plan to stay with this CPU for few years, you may better go for the i7 (if you use it for gaming).
Last but not least, if your mobo do not support ECC RAM, then the only reason to go for XEON may be just because it's cheaper. And it's cheaper because it has no benefit over the i7 for most of the people.