I am using Windows 7 RC with the Vindows XP virtual machine to do all my work.
I do all the programming in AVR in Windows 7, build it, then hop over to my virtual XP window and run the boot loader from there. It's not ideal, but it works just fine.
So, if you don't mind upgrading to beta software that will expire next year grab Windows 7 and use that.
I like it a hell of a lot more than Vista.