I recently came across Matt Hester's blog. Turns out he has some really great performance tips for improving Virtual PC. Some of these tips I would have never thought of had he not blogged about it.

The tips come in a three part series with the first part here.

http://blogs.technet.com/matthewms/archive/2005/09/09/410546.aspx

The second part of the three part series is here.

http://blogs.technet.com/matthewms/archive/2005/09/23/411478.aspx

The third part of the three part series is here.

http://blogs.technet.com/matthewms/archive/2005/10/07/412159.aspx

With those blog posts you should have Virtual PC running quite smoothly and fully optimized so as to not hang during a crucial presentation or developing the next big thing. Hope this helps.