[ubuntu] Desktop virtualization on a headless server

I'm looking for your advice on feasibility of the following solution:

Problem:
I have a quad core machine with 8Gb of RAM running Ubuntu 12.04 server that is used for Samba, and Apache for Mantis and WebSVN. Also I have also an old Lenovo R60e craptop that runs WinXP that I use for about everything else.
I'm trying to delay the inevitable - to replace my craptop, by using my server machine.

Proposed solution:
I was planning on setting up 2 VMs, one with Ubuntu 12.10 desktop and the other with Win7/8 as my dev machines, while keeping the headless 12.04 server as the host and using the craptop as the terminal.

My questions are:
1. Is this solution feasible, or am I over-complicating things? If yes, are there better solutions, besides replacing the craptop?
2. What are the best virtualization solution for hosting both Linux and Windows VMs that allows suspending the VM, while releasing the memory, so I could assign 6Gb or RAM per VM?

Thanks!