I would recommend the virtual PC route as well, though I would suggest, if you want to run more than one or two Virtual Machines (VMs) that you get more than 1 GB of RAM. 2-3 GB would be a nice amount and a dual core CPU as well. But, that said, I've run as many as TWO VMs (running Windows) at the same time on a system with a 1.9 GHz P4 and 768 MB of RAM (my laptop).
As for your software (I know you're not necessarily asking this), but I STRONGLY recommend you get a subscription to Microsoft TechNet Plus - $350 for a year subscription (downloads only), includes licenses for non-production, no-time-limited versions of most Microsoft server products, including Small Business Server Standard and Premium, XP, Vista (betas right now), Exchange, SQL 2005, BizTalk, Office Pro, ISA Server, and dozens of other programs and utilities. Considering how much any ONE of these products would cost, $350 is a FANTASTIC price - also, you get TWO free calls to Microsoft support (good for 1 year) - each call is typically $245 - so you basically buy 2 support calls - at a big discount - and get all that software for evaluation and learning for FREE. (from one point of view).