I've used VPC for a few years now when I'm testing something new that I'm not sure will break my main machine - especially valuable if you're in a hotel miles away from your backups and must-have software.
VPC2004 sadly didn't work under Vista but the goodness is back now that Virtual PC 2007 has launched.
The excellent news is that, like VPC2004 recently, it's a free download.
Performance is up on the previous version (only to be expected) though you do still need a machine that can easily run your target OS before you try and run it as a virtual machine.
Note: If you had been using a beta of VPC2007 you must uninstall it before running the new installer