I used to use the Microsoft Virtual CD-ROM tool, but the public one doesn’t work in Vista. I also used Daemon Tools, but apparently it now bundles some SpyWare so I won’t touch it.
After a bit of digging today, I found this: Mount and ISO Image in Windows Vista :: the How-To Geek
It works perfectly and is free.
PS. I still don’t understand why this isn’t baked into the OS, but it isn’t.