This is awesome. I would love to put Android on my iPhone. I could use the iPhone OS for ***** and giggles and use the Android half for something actually productive.
My current phone (the Nokia E71) actually has this _exact_ feature -- you can switch between business and personal modes with a single button. Sounds cool, right? Well I thought it was a great idea until I actually tried using it. The implementation's fine, it's just that it's not really... useful. I've found that my brain does a pretty darn good job of filtering the on-screen information.
The developer in me, however, is thrilled at the prospect of being able to do virtualization on the actual hardware. Assuming that it's as solid as the rest of VMWare's products, I can definitely see this being useful to folks who want to develop/deploy on multiple mobile platforms.