I'm not a licensing expert, and I'd like to get more clarification, however with 2K, you got a license for Personal Edition, so on every developer's machine, if you had a CAL. I think that for 2K5, you do need to pony up the $50 for that. For test machines, I agree it can be an issue, and I hadn't thought about that.

It's definitely a place I think Microsoft could do well in attacking Oracle. For many installations, meaning a dozen companies I've worked with, I see no reason to choose Oracle or DB2 over SQL Server. The converse is also true, but none of the systems were approaching the limits of SQL Server.