If I can chuck in my $0.02 worth...
I'm a very enthusiastic user of Disk Utility/Disk Copy. It has several advantages over programs like Virtual CD. Disk images can be read-only or read-write. You can start with a blank image and add to it and then edit its contents. Unmount and the contents are frozen in the image.
Unlike the PC the mac has no disk letters so you can have more than 22 virtual volumes on your desktop at one time ( who knows why you would but you can). Also there is no contention between casually mounted images and network shares for disk letters (I'm looking at you, XP).
Fnally, you can Applescript the mounting of an image required for a particular application. Instead of Junoir shuffling through a pile of CDs when he wants to run Kid Pix he clicks on an icon that runs a simple script that mounts the CD image and the starts the application.
Typos by courtesy of my disintegrating brain... Never get old.