The man who doesn't read good books has no advantage over the man who can't read them. --Mark Twain
We do a lot of stuff with Virtualization at work. Most all of this is done with VMWare Workstation. But the free VMWare Player makes all this stuff really quite portable.
I made a VM of Windows Server 2008, activated it. Then I installed SQL Server 2005. This VM compressed down to less than 2 Gigs - small enough to fit on one of those cool 2GB USB sticks - along with a copy of the free Player.
Need a development environment? Just unzip the little doozy into a folder, start the player, load the little puppy and off you go! Great for testing installations, doing stress testing that would normally require two or more machines (but all on one "real" machine) and so on.
Next, I added Visual Studio 2008 Team System. Now it's too big to fit on on small USB stick (about 2.8 GB) but I just burned it to a DVD instead. I even modified the logon screen message to remind me what the Administrator password is, lest I forget.
It even supports VNC remote desktopping.
I also have a VMX of Open SUSE with MONO for experimentation with the MONO platform. If I want, I can run both VM's at the same time.