Not really a problem per-se, more of a feature request. I've just moved to Hyper-V and the only way to make consistent backups on the "host" server with running VMs is to use a backup solution that includes the new VSS-writer (again, not just regular VSS). Otherwise you have to shutdown the VMs before you make the backup. The VSS writer (in my limited understanding) goes a step further than VSS and uses the VM integration components installed on the VM and notifies it of the backup and prepares it. Normal VSS just prepares the host OS for backup. What does the "Notify System Applications" feature do? Is that just regular VSS?
The VSS writer is becoming an increasingly important technology with the popularity of virtual servers and is something I would strongly urge you to start developing in your software. Competition such as BackupExec, MS Data Protection Manager, Backup Chain and even the Windows Server Backup tool built-in to Windows Server 2008 include this technology.
If you're not familiar with what the VSS Writer is I'd suggest doing a little searching, there's a lot of information out there.