Can I virtualize my current XP install on Vista?

I'd like to purchase Windows Vista but I am concerned that not all of the applications and tools will be compatible. I was wondering if I could:

1) Take a backup of my current XP install
2) Fresh Install Vista Ultimate.
3) Create a Virtual PC.
4) restore my XP backup to the virtual PC.

This way I could have all the fanciness of Vista without losing access to any incompatible Apps.

Even if I can't restore my backup, I can still install a fresh (virtual) copy of XP on top of vista and re-install my apps right?
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  1. Best answer
    You should be able to run Virtual PC on Vista with no problem. However, I am wondering if you'll have to wait for Virtual PC 2007 to be released before it will run on Vista. I am currently running Vista Enterprise, but I haven't yet *dared* to try Virtual PC (because my laptop is only running with 1 GB of memory).

    If I try this, I will report back.
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