I'll chime in,
First your question about using bootcamp. Bootcamp allows the computer to be booted into a fully functional windows installation. Basically you are installing Windows on a clean, new computer. Windows will behave and act like any computer you buy at the store with windows installed.
What Jon is talking about with VMWare is the use of an emulator that can simulate an OS session within the existing OS. You still boot OS X but then you can open a virtual machine that can host the windows OS. That session operates like a virtual computer that you can do anything with just like a standalone computer. However there are a few issue namely speed and 3D acceleration, that is is a penalty for virtualization. However for the AC user the requirements are so low that the speed penalty does not affect the function of the program and 3D accel is for gaming.
You first have to decide which approach to take. Either boot into windows with bootcamp which essential is just make the mac hardware a windows computer. Or do you want to run windows in emulation during the Mac OS session. Running in emulation would allow you full access to the Mac OS and software along with the Windows. Of course bootcamp is free, the other virtualization products are not but their cost is minimal.
The next issue is the choice of Windows. First of all I would disregard Win 7. It has not been released nor is their a set date. Remember that Vista was suppose to be a 2004 release. So the two options are Windows Vista Business/Ultimate (home is not a option) and Windows XP Professional. Vista is the new release of windows and most issue are sorted out. Vista has more eye candy but higher requirements for the hardware. If you were to use the bootcamp option then this is not an issue, most macs have enough hardware to run vista fine. In emulation that may become more of an issue but if you keep the installation lite on programs you should be fine. BTW you have to use the retail license of Vista Business/Ultimate in order to install it on a virtual machine. While the home versions work in virtualization only the higher versions are licensed to allow that installation.
XP professional is more tried and true and the crowd favorite on the AC forum. The XP pro has a lighter footprint (only 2 gb base install vs the 15gb vista install). XP works fine and will work in emulation much better from a performance perspective than will Vista (although with AC you probably would not notice). You can install XP professional in emulation and not violate the license but it still needs to be a retail license.
XP professional is a better choice in my opinion for emulation. With Bootcamp is a toss up with Vista or XP.
VMWare is the best virtualization product, which I have used in Linux and Windows. VMWare is essential the "stardard" product in virtualization.
Geoff