While installing VS2008 SP1 on a 8GB VMWare machine today I encountered the need to increase the virtual hard drive size - didn't have enough space for the SP1 setup to run.
Luckily, VMWare has vmware-vdiskmanager utility which I used and very much followed the Increase your Virtual machine's disk capacity post instructions.I had to clone my VM to remove all snapshots - vdiskmanager requirement.
The only problem I ran at was that the diskpart utility wouldn't expand the capacity of the disk and fail.
On second reading I noticed the following comment
If the disk is the system volume you will need to mount the disk in a
second VM and expand it from there. If its not a system volume do it
within the virtual machine it belongs to.
I only have drive C on all of my virtual machines as, I'm sure, most of you out there.
So, don't forget - you need to add the virtual disk file as secondary drive to another VM (VM B) and expand the disk on VM B, at this point you can remove the disk from VM B and start your VM A with new disk size.
Another post Increase the size of your VMWare disk drive by Carl Tyler points to VB UI wrapper for the vmware-vdiskmanager utility, and tips on expanding virtual machine that has snapshots.
Edit: One more useful article with screenshots - Expanding a drive within a VMWare image