Indeed it is a great tool for running / testing scripted installers like Install Shield Developer MSI installers.
Another cool thing that I did, with VPC2k4, my laptop, and a pen pad was to write some demo tablet pc apps without having a "real" tablet pc.
its also good for QC teams that are going to be testing and always need clean machines to work with, but I agree that it is a hog.
I tried to install team foundation server and team studio into a win2k3 server image and it failed miserably.