Im gonna continue with VM/HyperV server development.
The problem is really, that doing development on a client OS is that it doesnt in any way resemble the dev-test environment. Hence you will see all sorts of "it works on my box" issues, because the developer sits on his client instead of on a similar (optimally created from same golden image) server than the dev-test/int-test/pre-prod/prod servers (eg. same version of RAD editor, same regional settings..).
Also its so cool to be just able to fire up a test WCM site, or a test portal, do a few tests and return to the old snapshot.
For demo purposes or demonstrations on the other hand, a laptop with Win7 would absolutely be a good alternative, but as Jaap say: never for real development.