This topic has been mentioned before in the forums, but not, as far as I can find, very recently, so I thought it worth mentioning again, because it seems to have been made an awful lot easier since I tried to use it last. You may already know about it, but if you don't here it is. Rather than type it all out, I will just link you to the page I found it on.
http://www.webupd8.org/2011/02/how-to-b ... y-way.html
I tried it on two iso's, one worked perfectly and one didn't work at all, so I can't claim it is a 100% solution to running iso's for test purposes, although I could have had a faulty download on the second iso - it didn't check the md5. The beauty of this method as opposed to say kvm or virtualbox or even a live cd is that it does not require any extra resources to run and thus works at full speed. It also works with your actual installed hardware not virtual hardware and thus gives a much better impression of how your new distro will work with your machine. It is also ridiculously easy, and I like that
For those of you with multiple grub installs, don't worry about installing it on the / partition (you don't have a choice in this), my grub 2 installation is on a partition not on / , and it installed the entry onto the partition I ran unetbootin from, not any other. I also have grub-legacy on my mbr and it didn't interfere with that either (though I was a little concerned that it might).
The 'removal' method as mentioned in the linked page also works flawlessly so the 'extra' grub entry is not there for ever.
If it works for you it is the best way I have seen to date of testing iso's without wasting a cd/dvd or time installing to usb for something that you might not actually want to keep.
Edit. I have tried it a couple more times since writing this and it has worked perfectly both times. One tip which may help is that if you are given a choice between an 'install' iso and a 'live' iso then choose the live version.
Edit. Although this works well as a way to test iso's, it did not work for me when I tried to install a distro from an iso I was testing with this method. Try it by all means, but all that happened to me was that I got an error part way into the install process saying that my cdrom drive could not be unmounted and the install just stopped. I guess this is something to do with the way Unetbootin performs this type of install. I didn't try manually unmounting the cdrom drive, but I would guess that if the installer can't do it then the user won't be able to either.