You definitely do not have to re-install Windows every 6-12 months for decent performance. Just don't install every doodad and hopefully don't have corporate IT pushing 10 management applications running in the background.

Developing in a cloud VM is painful in other regards, specifically with regards to IDEs. Basically your options become to use a local IDE, with slow access to your files (not fun when PHPStorm needs to re-index your vendor directory), or to use a cloud IDE (none of which I know of are particularly good for PHP, nor as snappy as running your IDE locally).

Of course, you can just use a text editor instead of an IDE, but once you get used to being able to jump to definitions, get method signature autocompletion, refactoring, syntax checks etc, it's kind of hard to go back to just a text editor.

I’ve found the best middle ground is to use a Mac and then mostly develop in a local VM. Snapshots/etc are wonderful, and they can be transferred from machine to machine, so “setting up my development environment” is as simple as “install Parallels.”