Parallels Desktop 4 supports this as well as VMWare Fusion. VirtualBox does not support Bootcamp partitions but I have seen some code submissions that suggest they are working on it.
Windows 7 works happily this way. I have tested during Beta and RC with no issues, since it is still treated as Vista and the base still is. The same rule applies to Windows Server 2008 and Windows Server 2008 R2.
Performance is dependant on the settings you specify. If you can't allocate at least a 1GB to the virtual environment do not expect good performance. I really like VMWare because they have better multiple display support, however Parallels since the last update to Version 4.0 has been fairly stable. It is however not as good as 3.0 IMHO.
I have however removed Bootcamp completely as the only reason I need a Windows environment is for Visual Studio, but I now use my Mac exclusively for Mono development.