I run Ubuntu (with Gnome) myself, so I can only speak on the other distros from what I have read in reviews. Basically the other distros each have their own idea of what usability on a desktop means. The primary addition to Kubuntu is out-of-the-box support for proprietary codecs such as Windows Media and MP3. Each have Live CDs, so they can be tested easily. MEPIS was originally based on Debian, but moved to an Ubuntu base last year with version 6.0. Freespire and its commercial sister distro Linspire was also originally based on Debian, but will be Ubuntu-based with their next release (Q2 2007). I forgot to mention Linux Mint, which was built on Ubuntu from its beginning last year, and has not settled on KDE or Gnome as a default. It is worth mentioning the only Linspire/Freespire has licensed the proprietary codecs they include, so only they are strictly legal in the US.
I agree with you on VMware. Much of their functionality is now available for free. I have used VMware Converter to convert Windows machines to virtual machines before installing Linux on them, and VMware Server to run the virtual machines, all with great success. Thanks to it I will be able to continue using W2K indefinitely (the last good version of Windows as far as I am concerned). The only real reason to use WINE is if you want to avoid a complete installation of Windows, or if you have memory or space constraints that rule out VMware.