There's a new virtual desktop manager available over at CodePlex, Vista/XP Virtual Desktop Manager. Prior to finding this one I used AltDesk on XP for years and it worked pretty good. On Vista however, I never got it to work properly. It lost windows and crashed a lot. These days I have multiple monitors on my main desktop machine but I still find virtual desktop managers useful for having separate 'workspaces' when I am multitasking on several things at once. They are also super useful on my laptop when I travel. I can have an email/Internet workspace and a development workspace and switch back and forth as necessary.
This new one is by far the best one I have seen for Vista (or XP). Unlike AltDesk it has a very minimal UI, which I actually prefer. It allows up to 9 virtual desktops and has flexible hot-key assignment for all of the features. You can pull up the "switcher" which will show all of the virtual desktops at once and allows you to drag/drop windows between them. It supports 'sticky' applications which will show on all of the virtual desktops, which is really useful for things like the task manager, Vista's gadgets, etc... Another nice feature is that it supports live thumbnails on Vista as well as an Exposé-like application switcher.
Vista/XP Virtual Desktop Manger is open source and seems to be actively worked on. At this point it is labeled an RC candidate but so far it seems pretty stable to me.