I have about a year and a half experience with Gentoo. My advice: Stay away from it. It's compile hell.
I'm currently using Ubuntu 8.04 without any problems. Before that Ubuntu 7.10 and at work we have our webservers running Ubuntu 7.04. Also without any problems. Though not in a VMWare environment. I believe there's also the option to install Ubuntu 8.04 in a file on your Windows partition (you can just delete the image when you don't need it anymore). This way you can boot to Ubuntu 8.04 without it affecting your current installation. It's just a big file on your C:\ partition.
I'm currently using Ubuntu 8.04 without any problems. Before that Ubuntu 7.10 and at work we have our webservers running Ubuntu 7.04. Also without any problems. Though not in a VMWare environment. I believe there's also the option to install Ubuntu 8.04 in a file on your Windows partition (you can just delete the image when you don't need it anymore). This way you can boot to Ubuntu 8.04 without it affecting your current installation. It's just a big file on your C:\ partition.