The latest free VMware Server (VMWare 1.0.x) "works" on Windows Vista host. I have tested it on both Windows Vista Basic as well as Ultimate. I guess by not fixing their incompatabilities for VMware 1.0.x with Vista, VMware is trying to get people to buy their Workstation edition.
VMware server has less problems running on the 32-bit Vista host than on the 64-bit Vista host. The unpleasant user experience that I have noticed is that Vmware Server will spin the hard-drive and will make the Vista unresponsive for a minute or so. It does it during the first time you power up a virtual machine. There are some USB device problems as well. However, since VMware has not got their VMware Server's drivers signed for Vista, the 64-bit Vista's will not allow their drivers to be installed unless of course you disable that during Vista 64-bit bootup. It is not fun. Basically try to use VMware Server on 32-bit Vista host so that you will have less limitations to deal with.
While installing VMware server on Vista towards the end of the installation say "yes" to that unsigned driver installation notification. Once the installation is successful, you might be asked to restart the vista host.
Alternatively you can use an open source virtualization instead of VMWare: http://www.virtualbox.org