CoLinux has been ported to linux. [I have updated it's wiki page.] This means it's closing in on being a decent free VMWare clone in terms of platform support... well, if you only want to run Linux VMs, anyway. Also, other folks have thought about (and prototyped!) running coLinux as a service. Headless VMs has long been a top feature request of mine for VMWare (I hold out no hope for VirtualPC).
I think the potential of embedding a Linux brain + 10Gig or so of assorted free software into any Windows computer is staggering. LiveCD's are an excellent way to mess around with alternative OS's, but running a coLinux instance as a headless service has a much better chance of breaking through the novelty barrier and becoming part of someone's routine. You install the service, and stop thinking about it. If you need to run an app you don't have, you check your coLinux instance to see if it's already installed for you, or is apt-get-able etc. like Lindows Click-n-Run. The packaging folks have done all the hard work for you ... let the 95% of computer users who run Windows take advantage of it and you have the makings of an inflection point.
[Update...I think the above sourceforge links are broken because of site maintenance. I'll check them tonight to see if they're fixed.]
I'm off to Chicago for a couple weeks to do some work with the folks at Interface Software. They make the CRM package ('Interaction') that I was certified on last month, which has had trendy social networking features for a few years now. I'll be making the pilgimage to their HQ to do some tag-team data conversion and customization on a mutual client project. I'm looking forward to being able to catch up with some friends in Chicago.