The trick here is a couple of things.Well, one problem I have with that is the speed. XP is SO SLOW on VPC7, I tried using it for downgrading my iPhone 2G once but gave up because of the speed. 2 minutes just to get IE open, let alone download Firefox.
My favorite use for VPC7 is running Windows 98. I've used quite a few Windows versions, and I think 98 is one of the best ever.
First off, most people make the mistake of maxing the RAM for the VM. It's crazy, but the way the app functions, doing that actually slows the app down. There is a sweet spot and it's around 384MB of ram.
Second, XP contributes to this because most people do not turn off the eye candy (just like they don't in Leopard). In the system properties in the performance section if you select the option for "Best Performance" then it shuts off all the whizbang menus and effects.
It won't make XP super fast, but it will get rid of two minute start up times.