Still to be persuaded
I use VirtualBox on Linux and run VMs for a few tasks that require a degree of isolation or experimentation with the OS (the ability to roll back to earlier states is very useful). I have considered a home virtualisation setup several times, but a number of problems always deter me:
1) Windows licences: why would I want to pay for these to run on my VM when I can use Wine to run the few legacy apps that are still windows-specific? When buying a new machine, you get a free windows licence (well, not free, but it's usually hard not to pay for it anyway), so why not use that on the machine it was bought with if you really need windows?
2) You still need to keep all your VM-installed software up to date. At a basic level this is for security, but in practice also for compatibility with external stuff that keeps on changing. The more VMs you have, the more hassle that entails (except possibly if they all use identical software). Eventually, the OS installed on a VM needs upgrading because support stops. That's a whole new load of hassle too. If you installed it to run legacy apps, you may find they don't run after the upgrade, negating the whole point of using the VM in the first place.
3) The guest tools that provide integration with the host often don't run on old or obscure guest OSes so, again, VMs aren't an ideal solution for running really old software.
4) Historically, virtualisation software has had its fair share of bugs. Compatibility between old VMs and new versions of the virtualisation server hasn't always been 100%. Some older OSes won't run on certain versions of certain VMs. Integration between host and guest can break when versions change. Sometimes you can live with the consequences (although they're less acceptable to family members who aren't so computer-savvy), but sometimes they are show-stoppers too.
5) Access to hardware from VMs, as others have noted, is usually fairly pitiful, typically with serious performance issues. Even if your chosen VM allows direct access to devices, this will remove the isolation that the VM provides, so you'll have issues when the hardware changes (and that was what the VM was supposed to prevent).
I think the goal of separating the OS, the personal work environment and the hardware is a laudable one, but I'm not sure that virtualisation really pays off in a home environment.