I imagine it won't use much at all: it's a special copy of XP, in a specially-written VM, running on a single platform. They can likely get memory management, and other crazy things, to fall through to the host OS.
I hope, though, that they're not trying to make XP applications as secure and trustworthy as W7 applications by wrapping them in a slow software condom; that, instead, they're just trying to ensure backwards-compatibility to the utmost extent possible. If something could crash XP, it should be able to crash W7 transparently through VXP—that's the level of entanglement where you start to see real performance. The users who need the old applications, that ran on XP but don't run on Vista, know what the bugs are; they'd rather have the same bugs, with the same symptoms, than new bugs. They know what they're getting into when they install something in XP-virtualization mode, so we don't have to improve the experience beyond what it was like in XP just for them. That's what releasing a W7 version is for.
"If something could crash XP, it should be able to crash W7 transparently through VXP"
Pretty sure users are going to be willing to give up a degree of entanglement to both be able to run their XP apps and have a system that doesn't crash. That alone would be an incentive to upgrade to W7.
Classic on OS X worked the same way, too: a Classic app could take down the entire Classic environment, but OS X would safely charge on apace. This was definitely something that helped drive people to upgrade.
Microsoft does heavy optimization for Windows OSes (see http://blogs.msdn.com/virtual_pc_guy/archive/2004/11/05/2527...). Windows 7 is also quite fast on its own on modern hardware, even if it can't stack up against XP on 2001 machines. I don't think it's too much of a stretch to see people using this technology regularly and seamlessly, especially since third-party companies have been doing this on the Mac for years.
