VMware's free VMware Player is all most users need to enter the world of virtual computing. Like Oracle's VirtualBox, and unlike Windows XP mode or Microsoft's free Virtual PC 2007, it will run virtually any operating system ever invented: DOS, Windows 3.1, XP, Linux, Unix, etc. There are also plenty of VMs (appliances in VMware vernacular) available both at the company's Web site and other places online.
As of version 3, VMPlayer also lets you create your own virtual machines. Formerly, it was only what its name would indicate--a player of existing machines. You had to either download a VM, create one with the free server version, or jump though a lot of hoops with some free utilities to create one. VWware supports a wide variety of USB hardware, and allows you to to drag and drop files from the host PC (the PC on which your running VMware Player) to and from the VMs--a feature that has made it a favorite over the years.
Sadly, in my ongoing tests under Windows 7, VMware performance has taken a major hit from what I experienced under XP. The lags while VMs, windows, and menus open--and the continual grinding of the hard drive--is wearing on the nerves and patience. This is on the same physical PCs with fast Core 2 Duos and 3GB/4GB of memory that the VMs ran perfectly fine on under XP. It's bad enough that I've switched to VirtualBox.
VMware Player is still the slickest free VM software around, and the company claims they've had no other reports of reduced performance under Windows 7. Perhaps it's the SSDs or some other quirk on my systems. The program is free, so download it and if it performs well for you--enjoy it.