I use Xpra, but it's a little buggy. E.g., buttons don't always appear in the right position within a dialog. Sometimes it hangs up and I have to restart it. Some fairly complex apps don't like to run under it (I think I had this problem with IntelliJ IDEA, which also isn't entirely happy under VNC/twm). Also, running XEmacs under Xpra is a bit slow for some reason.

I use VNC day in and day out, and Xpra has not replaced VNC for me, though I originally thought it might. The rootless model is cool.