Why virtualize your development
This is a +1 to the touting of the virtues of virtualization.
A number of things happened recently — a new iMac, a new dev project, new developers on the team, new unexplained gremlins — that made me realize: virtualization is the way to go. We develop on Linux, so I chose VirtualBox because it's free-er and lighter than VMWare.
The problem
Software is not system agnostic. If you chose to develop on your own machine then it has to serve several masters: you, the owner and operator, and the projects you're working on. As a result, you spend time configuring your system for multiple potentially conflicting tasks and solving system-related problems instead of actually working on the project. Increasing the number of developers and projects obviously makes things worse.
Adding development systems and setup time
It's rarely just a simple checkout from your favorite source control repo. There are also tools and libraries to install (some of which will serve no other purpose than this particular project), tables to set up and checklists to follow.
Multiple developers
No two environments are the same, especially when run by different people. Ultimately, each developer must design his/her own unique solution to getting the project to run on their system. Sometimes the solution does not exist.
Multiple projects
There is crap you install for every project and probably never remove. Then there is crap that has to run as part of the context of working on project X: Eclipse, several VIM sessions, consoles, terminals, CSS color pickers, etc.. This is crap you have to fire up and shut down when you switch contexts. No, you do not have unlimited system resources.
If all this crap hogging your precious system is bad enough, what do you do when you have, say, two projects that require different versions of Postgres?
Conflicts with YOUR system
Even if only work on one thing, your personal machine lives its own independent life. What happens to your machine during its course might affect your environment in ways you may not expect, much less like. Just recently a Safari 4.0.4 (how appropriate) broke GWT hosted mode, and the only solution was a manual rollback. Yeah, fun!
The verdict
Your environment-sensitive projects are bad for your system. Your system is bad for your environment-sensitive projects. They must be divided.
The solution
Why, of course the nice isolated VM that fires up in an instant and tucks away when not needed.
Every developer can have the exact same environment
No unexplained irreproducible glitches, no variances.
Context switching
Press a button and your whole development environment disappears. With all its running tomcat servers, databases end editors. System resources: free!
Press another button and it's back exactly as it was.
Snapshots
Snapshots are incredibly useful. Save any known good state and revert to it when things have gone bad. No need to retrace your steps if you don't want to.
More importantly, this is unlimited freedom to try anything. Want to replace X11 fonts and see what it looks like? No problem! Make a snapshot and fire away. You'll be spared the agony of having to fix the system you just broke.
As of VirtualBox 3.1 snapshots are brancheable! You can branch off any snapshot, past or future (relative), and have a whole tree of them. Right now you can only run one snapshot at a time, though, but there is a way of spawning off a new machine.
Target environment
Your target environment will likely be different from your host. In a VM it can be exactly the same, or at most you'll have to resolve conflicts between one development environment and the target, rather than many.