Yes, I can see a great deal of benefits for development part, _if_ you're sticking with the same OS. Currently I have a bunch VMs (using kvm/qemu + libvirt) that are created and dropped as needed. The biggest advantages I see is that I can create a near identical environment with our VPSs... + I can test different OSs too (Linuxe vs *BSD).

My current pain point is the hdd space, since I have to resize VMs storage when needed. Even though it was automated, but still I'd prefer to use some shared hdd space and not to worry about it.