Sweet rig!  4gb should be just fine even if you are using a VM on top of the main rig, just be sure you allocate enough ram (1-2gb) to your VM if you are going to be doing "heavy" development on it.  One thing to note, however, is if you are going to do any 3d type dev stuff (ie., Silverlight, WPF) you may not want to run it in a VM but might rather run it as a true machine.  The reason behind this is the VM video cards are not as powerful as your real video card.

I personally like VMWare better although from what I've heard the MS stuff has come a long way if you use the Microsoft Virtual Server vs. VirtualPC.  That's the thing though, I find the client a lot more to my liking with VMWare than MS Virtual Server.  VMWare does have a free server virtualization tool or you can go with the VMWare Workstation (which I use).  Beyond that, they have all their server virtualization tools as well -- at my day job we have a huge infrastructure built around VM servers.  Last time I checked (almost 2 years now) we had 20 very powerful blades running a VM farm.  These days I know those numbers have increased greatly.  At any rate, we run all sorts of servers on VM including MS Exchange 2007, MSSQL (2000,2005; several instances of each), DNN (I have a dedicated VM for that one), and then tons of other servers for various functions.

Good luck!

I have been *extremely* pleased with Vista 64 since I moved to it from 32 bit.  Now, I moved to it right about the time SP1 also came out so I'm unsure how much of the stability increase came from going 64 vs. 32 and SP1 (I think I ran SP1 for a month before the move to 64 bit).  Everything just seems to run faster, smoother, etc.  Even my video games seem to run better on 64 than 32 bit.

As of yet I haven't really ran into anything that doesn't work in 64 (I have ran into things that don't work with Vista in general and have had to load them into a Windows XP VM).