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We use a ubuntu virtual machine for a local development setup which provides a consistent development environment for all developers and lets them use an OS/IDE of their choice for other work.

The image is based on ubuntu server 10.04 and runs on VirtualBox.

Are there any extra packages/processes that can be stripped or some tweaks which can be applied to reduce memory/cpu usage by the virtual machine for a better development experience?

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You can press F4 at the install screen of Ubuntu Server Edition and choose a minimal install. You can also use vmbuilder to build an ISO with the minimal packages needed for a VM.

See here for more info:

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