Do multi-core CPUs work faster and better than single core machines when
running multiple VMs on a VMWare Windows Host ?
Host = W2K sp4
Guests = WIN98se/ME/W2K
Absolutely - as long as the host shows two CPUs (or four or what your num cores x num procs equals), then VMware will take advantage of it.
In addition to this, go with 64-bit host OS (XUbuntu Linux 6.0664 LTS is a good all'rounder) and 64-bit AMD or Intel architecture, if you can. Quite a bit smoother and faster, even with only 2GB RAM.