NLB is a decently efficient solution but it has it's limits, too. IT works single data center only, so you better make sure you dont have an issue there - or multiple NLB'd clusters. NLB scalability limits are in the documentation - I thin it is around 32 computers. It is a good solution if you dont have a front end load balancer (like in the router in front). It is definitely bettter than DNS round robin which on one side is ignorant to computer utilization and on the other hand of computers down for maintenace.
NLB will NOT solve inherent scalability issues, but it will try (and do a decent job) to balance incoming connections to the different computers.
Is it popular? Not SO much. The main reason being that many high end routers have load balancing functionality already in there, and somehow people go for hardware. Is it unpopular? No. Is it a shame it is not more widely used? Yes.It is really a decent technology.
Btw., upgrade to 2008 R2 - your license covers that anyway (unless you PURCHASED licenses, then you are - in for waste as they are not usable for service providers AND more expensive than the monthly SPLA rental agreeement with Microsoft.... a web server for around 15 USD per month processor license, btw.).