We used VMs for development at my last job - the whole IT department for the most part had one - well over 100 developers, QA, DBAs and BAs, plus VM servers for development/QA. For the most part, they worked out pretty well as far as speed and performance are concerned. Reliability was an issue for the first few months. Occasionally a VM would lock up or you would not be able to logon to your VM and you'd have to have the helpdesk re-start it. We did lose a few and have to re-create them, but that was the company's fault for going ahead and using them before the backup/recovery process was tested and in place. The only real issue I saw as a developer was when we used VMs as servers (win2k3 and win2k8) for SQL Server or BizTalk or any of those types of development tools (except IIS - those ran fine). These ran REALLY slow and it didn't take much to lock them up. Unless you are in a position to allocate alot of resources (2GB RAM or more, CPU -??) to these, I would not use them as day-to-day servers, or at least be prepared to to allocate the necessary resources to them.