Most of this stuff is a moving target, so it's very difficult to anticipate what will (or won't) make it into Longhorn....
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It is clear that Microsoft eventually wants to take the virtualization stack and the hypervisor and make them part of Windows "sometime in the Longhorn timeframe" (i.e., 2007-2009?), according to Microsoft's Bob Muglia, in an interview he gave back in 2005.
One theoretical possibility is that the operating system may become a way to create and manage multiple virtual instances of itself for the sake of security -- for instance, if you want to try out a new application, you could test it out in a virtual instance of Windows before committing the changes to Windows at large. But how they choose to implement it and to what degree is still up in the air, so I wouldn't imagine that Microsoft Virtual Server and Virtual PC are disappearing anytime soon. (And even if they did, I don't imagine the virtual machines created for them would be useless.)
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