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I think that I may as well use win7 64 as the main OS as it more nicerer features than 2008 server.
Then virtualise whatever else I need. Hmm I hope my MSDN license allows full installs - with no dreaded 'licencse is expiring' messages.
Too much unsupported hardware, esp for certain applications you might want to run on a desktop pc it's not technically feasible. I would certainly think about it for a dedicated server box though.
to add to to the downsides already mentioned, ESX is the host OS - a very barebones minimal linux distro basically (if I remember correctly) so it's not like you're not running a host OS, just a very limited one.
It obviously depends a lot on the scenario, but I still run a lot of my stuff NOT in a VM - better performance, compatibility and experience, so I'd rather have decent host OS and only run with VMs obvious overheads if I actually had a good reason to it (maybe fear for a virus, stability of the system, or just testing other OS).