That is nowhere near the purpose of Virtual Server
I've nevre heard of Virtual PC so can't comment on that
Virtual Servre is for server environments. Manytimes its required to have a server specific to a task for security reasons (and for webhosts, some people demand their own server) so instead of having 100 little servers to do this little work you can buy 5 huge powerful servers to run all the little guys in 'virtual servers' so everybody is happy.
This is by no means 'innovation' as VMWare has been doing this for years.
Microsoft is simply playing catch up (by again, just buying another company that had already developed the software)
The problem I have with virtual server is obviously the host server will be windows and MS Proclaims virtual server will work with Linux, whats the odds they'll spend 2 measly minutes tweaking it to work well with Linux?
Article for those not knowing what Virtual server is
http://news.com.com/2100-1012-5161193.html
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To run legacy application you will run a legacy OS in the virtual server to keep the legacy application going.
BUT.. <drum roll> you have to run Virtual Server in Server 2003 SO you have to buy virtual server, and server 2003.