Hyper-V does support Linux as a guest OS, but being it a Microsoft platform, it's obviously more focused on Windows compatibility; here is the official list of supported guest OSes:
http://technet.microsoft.com/en-us/library/cc794868(WS.10).aspx
It could be worth noting that VMware ESXi is also free, and it has a much broader guest OS support (apart from being the market leader in virtualization and a generally much more mature product than Hyper-V).
Also, Hyper-V Server is somewhat painful to manage if you don't have System Center Virtual Machine Manager available: it has no GUI (the physical console can only be used for basic administration), the remote Hyper-V MMC only runs on Windows 7, and if you don't have an Active Directory domain around, things can get tricky. ESXi is much more user friendly, as long as you have at least one Windows PC (XP or later) where you can run the vSphere Client.
