Update: Jon Galloway shared a November 2003 eWEEK article where Microsoft states that they have not removed any Linux support from VPC. But it does not say that they explicitly test Linux themselves or provide particular support for any Linux flavors. As the old saw goes: If it ain't tested, it doesn't work. However, the article text implies that Microsoft relies on beta testers to do the heavy lifting here.
I mentioned to a colleague about the availability of VPC to run different configurations on a single PC to facilitate a sand box machine to test emerging technologies. I knew that the Microsoft folks were dog-fooding with it for Longhorn. However, I was a bit behind on the it's current status.
Microsoft Virtual PC 2004 went RTM in November 2003. It got a mixed review from PC Magazine. The biggest negative for my colleague was the removal of official support of Linux OSes. However it is cheap enough; comparable to it's largest competitor, VMware.
Microsoft is working on a server-class version that has been in beta, Microsoft Virtual Server 2005. (Review) It is now at Release Candidate phase.
There's more info here. Also, I found a good comparative review of VMware 4.5 and VPC that includes a good side-by-side comparison table.