Hi Brandon,
I personally prefer a virtual environment for developers. Each having their own sandbox will help reduce conflicts that arrise during development. Make sure to give yourself plenty of disk space and memory; a minimum of 2 to 3 GB memory if you are going to run MOSS and Visual Studio together.
The next, and even more important, question is what are you doing with regards to your build server and QA staging environment. I don't recommend going directly from your development sandbox directly to production; in any environment.