Andrew asked whether VMware works correctly with USB devices. I can't speak for all VMware products, but certainly the USB support in VMware Server kept improving during the long beta-test period, and now it's pretty good. I don't think it's 100% perfect yet, but I can back up my mobile phone over USB, I can run a webcam over USB, so it's mostly fine.
Quite a while back I had my whole system crash when I tried to mount a USB hard disk directly into a VMware virtual session. I haven't tried it again with the latest version of VMware server. Maybe it works (maybe it doesn't), but for hard disks, I think it's just safer to let the host system mount the USB hard disk, and then use NFS or Samba to make it availabe to your VMware virtual session.