Nowadays, going virtual can be a huge saver in the long run. You can run an older OS on new hardware for instance, and retain old applications that may not run on a newer OS. Your main OS is becoming less relevant as more items can be virtualized. For instance, several months ago I upgraded a user from Windows XP to Fedora 13 Linux, and ended up creating an XP virtual machine using VirtualBox in case they needed it for any specialized applications that simply would not work in Wine, or if they couldn't find an alternative native Linux application. So, I used their existing XP license to install XP in the virtual machine, and Linux doesn't have any licensing woes to worry about so it worked out very well in the end. I was able to deliver a new base OS for browsing, email, office software, etc. with Fedora 13 and all of the latest security patches, without having to go and purchase a retail copy Windows 7, not to mention upgrade the RAM in the PC from 512 MB to 2 GB +. Plus, this solution also buys the user more time to use the existing hardware that they currently have since Linux doesn't require a huge amount of resources like Windows 7. Linux can easily run on a PC with a Pentium III with 512 MB of RAM, for example. However if using a virtual machine with VirtualBox, it is cutting things close as the virtual machine should be allowed to use 192 MB or so for itself to run efficiently.
If you can get Windows applications to run in Wine, this is definitely the preferred method for application virtualization, because performance is excellent compared to the overhead of a virtual machine running its own operating system. Wine has also helped tremendously to reduce the dependency on using Windows as a base operating system for PCs. Wine has so many options and allows you to run multiple Windows environments (either together or separate, along with different versions of Windows emulation). Also, Wine takes advantage of multiple core CPUs. Unfortunately though, Wine still cannot run a lot of applications. I would say I've had about an 80% success rate with Wine. Fortunately though, Wine has a very good support base at www.winehq.org, that also provides a complete database of all tested Windows applications and how to get them working.
Running virtual machines also has additional benefits. Running Windows or Linux virtual machines can be captured in a snapshot, and rolled back in case something is changed or broken. Not to mention that if the underlying hardware were to fail, a virtual machine can be transferred over to another box. Some cases this can be done on the fly such as with VMWare ESX. Or in the case of the user above, when upgrading Linux, the virtual machine stays in tact within its own environment and ensures that all of the applications in it will continue to run without any upgrade issues or switching to different hardware.
I've found VirtualBox to be right in line with VMWare Workstation, and VMWare Server to be very well done for servers. Both are available for free. If you need hot replication or migration then VMWare ESX is the way to go for now, which is not free.