One thing that no one mentioned was containers. Yes, KVM with Curses works fine, but if you're just going to run Debian within Debian, you have a couple other options. One is schroot if you just want a basic development environment. Another is Vserver or OpenVZ. They are both for VPS solutions. A third is LXC which is lacking some of the security of the older solutions but doesn't require a kernel patch. If you want to test new kernels, look at User Mode Linux. Note that these solutions only work for other Linux distros and not other operating systems. Also, make sure to install debootstrap to set up testing or whatever.
