I'm still waiting for an official clarification from Microsoft on what the new Vista licensing terms mean, but here is what has developed since then.
In my attempt to very simply summarize the changes for people, I think I oversimplified the situation. There were a couple points specifically that were misunderstood. I think I assumed people would actually go and read the EULA starting on the page I specified, but that may have been a false assumption.
Anyways, I wasn't very clear on the whole ISO thing. Apparently some people read it as you wouldn't be able to mount ISOs to the system in Vista Home Basic or Home Premium. That is an incorrect characterization... no where in the entire article did I ever use the word "mount". Anyways, here's what the license says:
MICROSOFT WINDOWS VISTA ULTIMATE
ADDITIONAL LICENSE TERMS. The following additional license terms apply to Microsoft Windows Vista Ultimate.
1. STORAGE. You may store one copy of the software on a storage device, such as a network server. You may use that copy to install the software on any other device to which a license has been assigned.
This clause is not in any other sections. So, given all that, here's how Dumb Robert interprets it:
[Dumb Rob] In Home Basic and Home Premium, you can't make an ISO or other digital copy of Vista and put it on another storage device, such as a hard drive (networked or otherwise). It does say you can make one copy of the physical media for backup purposes... but no digital copies. In Ultimate, you can make an ISO, or copy the contents of the DVD to a hard drive.
Why do I say "copy the contents of the media to a hard drive"? Because the next clause of the EULA talks about actually installing the OS to the network for thin client scenarios:
NETWORK USE. Instead of installing the software on the licensed device, you may install one copy on a storage device, such as a network server. You may use that copy only to run the software on your licensed device over an internal network.
Now, IMO this section is ambiguous too, because I don't know of any thin client scenarios where you'd install 30 copies of the same OS on a server for Thin Client stuff... I would think you'd install it once and buy 30 licenses... but that may be outside the scope of Ultimate anyways... not sure.
Next is the whole thing on Virtualization. I'm inclined to agree with Ed that the license means you can't reuse the same license inside a VM on Home Basic and Home Premium. But if that's what the license meant, than it should have been more clear. Because the wording is a bit clumsy, I think the message is ambiguous. Because I'm not a lawyer or licensing expert, I'm going to err on the side of caution, and continue to stand by my original recommendation until someone from Microsoft tells me otherwise.
And finally, i just want to make sure I'm clear either way about using DRM in Vista. You'll be able to use DRM content on the physical installation of Vista, but it won't be legal inside the VM. I'm currently putting together a test to see if Vista actually blocks you from using DRM inside a VM, or if you're just "not allowed to". More on that soon.