For Workstation 7 and later and Player 3.x and later, you can increase the virtual disk from the GUI:

1. Select the virtual machine from the Inventory.
2. Click Edit Virtual Machine Settings.
3. Click Hard Disk.
4. Click Utilities > Expand, enter the new size, then click Expand.

Reference: http://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=1004047

Windows 2008 OS (~2 minutes)

How to extend the boot partition in Windows Server 2008

To extend the boot partition in Windows Server 2008, follow these steps:

1. 1. Click Start, and then click Server Manager.
2. 2. In the navigation pane, expand Storage, and then click Disk Management.
3. 3. In the details pane, right-click the volume that you want, and then click Extend Volume.
4. 4. Follow the instructions in the Extend Volume Wizard to extend the boot partition.

Reference: http://support.microsoft.com/kb/325590