The VirtualBox virtual machine software for Linux and Windows has been steadily improving. One very notable feature added recently is support for multiple virtual CPU cores. The feature requires hardware virtual support and works on newer Intel or AMD CPUs.
The Direct 3D support is also steadily improving and I expect that it may be able to allow additional games and perhaps Vista Aero in a virtual OS in the near future.
The "seamless" display mode has been in VirtualBox for a while and that allows one to combine the desktop windows for the virtual machines and host OS in the same desktop display. The task bar of a virtual operating system stacks just above the normal OS task bar at the bottom of the desktop.
Another new feature is a mini toolbar for full screen or "seamless" mode to use commands that are normally in the menu of the virtual machine window.
VirtualBox has also been adding support for more Linux distros and Slackware (that I use) is fully supported, as well as Ubuntu.
VirtualBox isn't perfect but the rich set of features and support for identical virtual disks and features in Linux and Windows make it an excellent choice.
You can find VirtualBox at
http://www.virtualbox.org