I'll answer that easily for you. My four-month old MBA runs VMware/XP just fine. I use XP for software development using IDE's and 5250 sessions for corporate work. Works flawless and even in a VM, it runs better than my previous Sony Vaio laptop.
I use the OSX side for email/web/apple apps. Had no problems whatsoever. At times, I use XP exclusively for 8-12 hours a day and browsing/videos/etc and forget that I am running on an Apple.
My MBA runs it just fine. It's still not a full desktop replacement IMHO but it is the most capable ultra-light I've owned yet. Since I carry it all day and commute by motorbike, I appreciate the well-built construction of it. Rev 2.0 of the MBA should be even better.
Even though the 2GB RAM is sufficient for both environments (1GB OSX & 1GB XP), I do wish it had 4GB total so I could bump up the XP environment. XP does better with more memory. Even with 1GB on the OSX side, it doesn't present a problem for me whatsoever.
Hope that answers your question.
Thanks for the response. Yes..that helps address some of my concerns and issues. I am hoping that new MBA improves some of its performance challenges as well. I am assuming you will not recommend Vista for it being more memory intensive. Can we still get XP open shelf licenses and would a basic edition( I suspect none existed and started with Vista) and still do most of our typical XP work (visio, project etc)