I run a VM in most cases.
With modern versions of windows - XP and better, I use the VMs from modern.ie to test on virtualbox. I tend to have a lot of ram, and the ability to snapshot makes life a lot easier for me.
With linux, I either use a VM or a livecd
This is why though, a good descriptive answer is useful - I try to answer in such a way that the OP can decide if its the right tool for the job. If someone looks at one of my answers and goes "this tool is awesome" I've done it right. This is probably why I use a lot of images in answers!