I had a similar question and rather than debate it in theoretical terms, I decided to buy with the idea that I'd replace/upgrade it if necessary. I wound up with a Core i7 920 with 12 GB RAM, 2 Intel 80 GB SSDs (RAID 0), two 1 TB SATA HDDs (RAID 1), and a throw away 1 TB SATA.
I tossed on Windows Server 2008 x64 and hosted a couple VMs on my SSDs. Very, very fast responses. (I have some experience with VMs and know that disk I/O would eat me up hosting a developer environment in a VM, especially when adding SQL Server to the same spindles.
I really did enjoy this setup, but then a VM playground arrived (a Dell 1950 with 32 GB of RAM and a nifty little SAN). I threw those VMs over to it along with some others and loaded Windows 7 on my SSDs. (I felt I could play around with my system because I was now hosting some VMs independently of my new workstation.)
The biggest thing I noticed was how much nicer it was to develop on a non-VM machine. Not the speed so much but the visual effects, the antialiasing of fonts, etc. The SSDs really made the I/O a non-factor, but they make everything feel instant. (Also, Windows 7 is sweet.)
I know I'll have to rebuild it when the RTM comes out, but I do have VMs that I can work in while it is being rebuilt. I'll need to use VPC instead of Hyper-V for building VMs that I need to ensure that no one else has messed with, but I think this is a reasonable tradeoff.
In short, I'd echo the others that say to host VMs on a separate server, but I'd like to add that Intel's SSDs are very quick. separate machines give you more flexibility. Your drives sound fast enough for testing, but for development work, instant beats fast.