With the introduction of Windows 7 we have a new method we can use for booting. There is also a backport for Vista if you are so inclined to still run that as your main OS

The Windows(R) Image to Virtual Hard Disk (WIM2VHD) command-line tool allows you to create sysprepped VHD images from any Windows 7 installation source. VHDs created by WIM2VHD will boot directly to the Out Of Box Experience, ready for your first-use customizations. You can also automate the OOBE by supplying your own unattend.xml file, making the possibilities limitless.
Fresh squeezed, organically grown, free-range VHDs – just like Mom used to make – that work with Virtual PC, Virtual Server, Microsoft Hyper-V, and Windows 7’s new Native VHD-Boot functionality!

Win7, 2008 R2, Boot from VHD and more! - Christopher Kusek, Technology Evangelist

I am using this same technique for my main desktop and Laptop.  By creating the VHD images I just copied it to the new machine ran my BCDEDIT script and booted.

No re-install from DVD, find an ISO Loader, etc.

Welcome to the new Virtual World.

In addition, I now employ Differencing Disks on my MAIN OS.  You know what this means?

I can install Betas to my heart’s content and run them at pretty much full speed with no worry of trashing my OS. I am getting about a 3% performance hit from the VHD on an SSD and I have FULL Hardware support.

I have never liked the 10% or more performance hit I was getting from Virtual Machines as well as the pain of double Natting and hardware limitations they have.

BootFromVHD is really awesome for a development machine or for someone who tends to try out a lot of software.  If something goes horribly wrong, simply drop the Differencing Disk.

You do have to take merging down the differencing disk into consideration, as well as creating a new one before installing big Betas but they are stackable.  I have 4 or 5 differencing disks sometimes. for example, I have VS2010 and VS2008 in separate spaces and a third that has them side by side. Then I have a differencing disk for trying out new programs.  My Main OS Install is not touched unless I merge the differencing disk down.

There are some drawbacks, you can’t BootFromVHD with anything but Windows, and only with Vista, Server 2008 and Win7, but that is fine for me, I don’t need to boot to Linux or XP on my dev boxes.  You also can’t do some things like Windows Experience Index, but I don’t need to do that most of the time and I have other machines for that sort of thing.

I would suspect that at some point this will become a pretty common scenario once Windows developers figure out just how nice it is to develop in this environment.

One thing that always bugged me was installing device drivers in a VM, it’s much easier with BootFromVHD and if the driver BSODs, bye-bye differencing disk, no restore/rollback necessary.

Here is a guide for doing it with ONLY the Win7 Install CD if you don't need/want a sysprepped image

http://blogs.msdn.com/cesardelatorre/archive/2009/01/11/windows-7-natively-booting-from-a-vhd-virtual-pc-image-file.aspx