When I installed Server 2003 on my development laptop, I had to jerry-rig some XP drivers in order to use all my devices, but I’ve been using this OS for all my development for almost a year now, and it has worked out very well.  It has been just as stable at XP and very nimble, too.  I use a Dell Lattitude D600 with P-M1.8Ghz and 1GB RAM.  The only complaint I have is MS’s lack of user support for Server 2003.  For instance, I can’t use Windows Movie Maker on this OS, but those are little issues.

As a development workstation, I’ve been very satisfied.  With XP, you are limited to one top-level website.  With server 2003, it can be many.  This is great if you do ASP.NET.  Also, it supports multiple remote desktop sessions.  I’ve had a very good experience with it.