There is an interesting thread on slashdot titled Experiences with replacing desktops w/ VMs? I have been using a Sun Ray client at work, connected to a Solaris Server. It has been working fantastic, after few glitches in the intial days of its rollout about a few years ago. I do lot of office productivity work (presos, documentation, email etc.) using the Sun Ray client. My legacy desktop is now morphed into a lab server, used to test some sample configurations of the products I build.
Do I recommend replacing Desktops with something like a Sun Ray Client? Absolutely. I never had to call servicedesk people to fix my desktop again. Moreover, I walk into any empty office, on any floor, just with a Java card and tuck it in the Sun Ray. There comes my desktop! Gives me better mobility than my laptop, especially when I am in a nomadic spree of walking across the floors for meetings.