After collapse of my QA server, I have been searching for various developments environment options for Microsoft Dynamics CRM 3.0 projects. As per my findings and discussion with other peer developers, most of them are using Virtual PC images for their development tasks. This is also recommended by Microsoft and a download at Microsoft website regarding VPC image is also available.  This will benefit in various ways: 

1. Developers will not be dependant on other developers in performing their Customization tasks at the same time. In this way overlapping of customizations done by developers can refrained.
2. In case of multiple clients, it's the ideal option as we are not going to setup our QA server and Development Server for every client.
3. Building new test environment will be a Zero copy deployment.
4. One has the options to cut down Development Server cost by just adding more RAM to developer PCs.
5. One can test various components developed by other vendors with no impact over our QA server and Development server.
6. One can test various integration scenarios with no impact over QA and Development Server.
7. Maintaining Microsoft Dynamics CRM server would be just as easy as importing and exporting Customizations to fresh VPC image.

If you have any issues regarding VPC please do comment. Thanks!