To provide a differing response, I'm running OS X and Xcode on a virtualised (VMware) machine on Linux. CPU is a Core2Quad (Q8800), and it is perfectly fast. I found a prebuilt VM online (I'll leave it to you to find) Xcode/iPhone development works perfectly, as does debugging via USB to the phone itself.
It actually surprised me a lot - but I've had no issues at all.