I've saved the best bit of news about Windows 7 to last: it comes with native support to mount VHD images. This makes me happy. In the keynote it was announced that there will also be support to Boot to VHD. That makes me unnaturally happy.
I am guessing that the boot support isn't in the bits we got at the PDC because I can't see how to do it. But here are some screenshots of mounting a VHD natively using Disk Management. First, just right-click and select "Attach VHD" and enter the path to the file (not shown):
The disk image then shows up as an ordinary drive:
Explorer sees it as a regular drive:
You can then browse into the file system directly:
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