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I am hoping to do some iPhone development, but don't want to switch my base os to Snow Leopard.

Does anyone know the most economical, flexible and successful way to do this?

I am thinking: purchase Snow Leopard, install on empty VMWare image.

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You can perfectly do iPhone development on Mac OS X Leopard. –  Laurent Etiemble Dec 15 '09 at 12:33
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For clarification, only Mac OS X 10.5 Leopard Server and Mac OS X 10.6 Snow Leopard Server are only allowed to be virtualized on Apple hardware. (per the EULA)

VMWare Fusion 2 and 3 both have native support for Snow Leopard Server - just insert the DVD, and start up VMWare Fusion's wizard to create a new virtual machine with Snow Leopard.

Snow Leopard Server is available for $500 USD. The iPhone SDK will run on Mac OS X 10.5.8 if you are running Leopard.

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