Joanna Rutkowska, famous for her hypervisor/virtualization security research (bluepill), just blogged about a new OS they’ve been working on called Qubes, now at alpha release (Screenshots).
It is built from Linux and Xen, and the basic concept is that everything (applications, kernel components etc) runs within its own light weight virtual machine, a strong implementation of OS level isolation via sandboxing.
That is, assuming the hypervisor isn’t compromised 
Nice concept though, hopefully development will continue and it hit stable sometime in the near future.
Hmm nice to finally see this form of sandboxing at OS level
I’d like this…kinda nice.