There has been some debate on the OzMoss List Serve here in Australia regarding the inability to develop with SharePoint on an XP/Vista machine properly.
The reason for this requirement by so many people is because of the controls put in place by organisation dictating that Developers HAVE to use an SOE workstation and typically these are locked down to XP/Vista and only have 2Gb RAM.
Common Steps in the Process
- Admin Rights
The first battle for developers within these organisations is trying to get local admin rights granted to install the extra applications required...this is an uphill battle from the start! - RAM
Getting extra RAM to handle having SQL Server and Visual Studio running to build Web Applications in IIS in isolation is probably the second thing these developers go through! - Windows Server 2003/8 -> Virtual Machine
To run SharePoint and all the trimmings you need Windows Server 2003/8 (there is a workaround - but it's a workaround for a reason). So if you are stuck with a SOE XP/Vista machine you can run a client Virtual Machine (VM) inside this host. For this, you're going to need to give the client VM at least 1.5Gb RAM and leave a minimum of a 1Gb RAM for your host. - Network access for source control
Once you have a VM running, you'll find it'll need access to the network to get to the source control server. This can also be an issue depending on whether your source control needs to be on the domain or not etc. You may also want to be able to access the Internet from within your VM as well.
Licensing Implications
All of this does imply license consideration, for example to get MSDN Subscriptions so that Developers can run Windows Server 2003/8, SQL 2005/8, MOSS 200 and VS2008 within their own environment. With most vendor platforms there are certain developer tools you need. I've always been fortunate enough to have access to these things, but it's definitely worth bearing in mind those who don't! I can understand why EndUserSharePoint.com is doing so well...because there are so many customisation shops out there that don't touch VS2008!
This has been discussed and documented in more detail on the 'Building a SharePoint Development Environment' on the SharePointDevWiki.com.
VSeWSS 1.3 CTP WCF Web Service
There has been some work done in VSeWSS 1.3 CTP to have a WCF web service included as part of the installation. My assumptions around this is that you can install this on a remote SharePoint Server and execute some of the commands remotely. This would mean that you could potentially do some work with just the dlls copied onto your XP/Vista Workstation and have VS2008 on there.