Microsoft has released a hotfix for both the 32-bit and 64-bit versions of Virtual PC 2007 SP1. The update brings several new features and bug fixes, including: additional operating systems are supported, both as hosts and guests; networking fixes; most interesting of all: the maximum graphics resolution supported in guests increases to 2048×1920 from 1600×1200. Still not quite enough to convince me to spring for one of those 30-inch monitors with their delicious 2560×1200 resolutions.
To install this update, save the .msp file locally. If you are running Windows Vista, Windows Vista Service Pack 1, or Windows Server 2008, run the update from an elevated command prompt.