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I am looking to buy a new laptop, either Win XP or Vista, due to my vast library of software. However, I gave linux a chance with Ubuntu 6.10 Edgy Eft, and it seemed to work OK until I couldn't figure out how to load all my applications on it using WINE.

It has been 6 months since I tried, and I will be building a desktop again very soon. I am looking for recommendations on Linux versions (I've heard a lot about Ubuntu, Mepis, Fedora, SUSE, and Mandrake) and how to run my Windows compatible applications such as Photoshop CS2 and Dreamweaver 8 on Linux.

Also, has anyone heard the rumors about Ubuntu possibly incorporating a 3D UI in their next version?

6.10 is Edgy. 6.06LTS is Dapper.
Not everything runs in WINE and if you have that many Windows applications and you can't find any Linux alternatives for them, maybe you should just stick to Windows. Wine really should only be used as a last resort when you can't find any Linux software that does the same.
If you're talking about Beryl, you can that in Edgy (6.10), it just doesn't come installed by default.

PS CS2 does not work in Wine or Crossover. DW8 does in most part.

I guess I'll be setting up either 2 systems or a dual-boot configuration. Any recommendations on flavor of linux?

Look at any of our "Waz da best l00nix" threads in Alternative OS. They all recommend the same.

Also, you could consider using VMWare (it's free for personal use) to run Linux inside Windows or vice versa. The performance won't be stellar, but you wouldn't have to reboot every time.

You could probably even get away with the same Linux install being run in either VMware or native as you wish. (Tricky to set up.)