I strongly, vehemently recommend virtualizing your SharePoint development environment. I recently convinced a heretic to convert to VMware, snapshotting makes life so much simpler.
Here are a couple of tips, specific to logging, that will keep your virtual development environment life simple.
1. Change the logging path to a physical disk. This can be done by going to central administration > Operations > Diagnostic logging, and modifying the path of the trace log to a virtual disk that is physical. You may have to fix permissioning, but it's a worthwhile investment between all your VMs.
2. Change number of log files to "1". Also change the number of minutes to use log file to something like "5".
3. Use a program such as "textpad" with change notification turned on, running on your physical machine, to view a running log of WTF is going on.
Now why are the above investments useful? Well,
a) Your Virtual development machine will not silently fill up with log files (which can get quite huge).
b) Zeroing on the specific log file you need is darned easy - there is only 1. :)
c) Textpad with change notification will show you a running history of the log - so debugging, especially with multiple monitors is finally a pleasure. I hope to author a utility that will make this even easier, it isn't that hard to write frankly.
d) Logging occurs, and textpad runs on the physical file system - so textpad can run on the host machine, and not consume resources on the virtual machine.