Microsoft released a very focused 71-pages whitepaper for using its desktop virtualization product, Virtual PC 2004, for development work:
Microsoft Virtual PC offers many features to facilitate the software development process. By using Virtual PC to create a valid representation of an end-user machine, developers can test application changes on virtual end-user machines instead of on the developer’s physical machine. This helps to mitigate the “works on my machine” syndrome, thus reducing overall development and test cycle times. Fixing a bug before it goes to the testing group is much faster than fixing it after testers detect it.
Read it here.