Don't be a cheapskate when VirtualPC 2007 asks you how much disk space to allocate for your machine. Do the max! I just did a comparison of three identical installs of Windows Server 2003 on a 8GB, 64GB and a 132GB (which is the max) disks. The difference? Less than 2.5%. Here's the numbers:

8GB - 1,514,532,352 bytes
64GB - 1,537,721,344 bytes (22MB more)
132GB - 1,552,535,040 bytes (36MB more)

But why pay that extra space? If you ever had to grow one, you'd know why.

But why 132GB? I don't even had that much space on my drive? Sure, but the beauty of a virtual disk is that you can copy it off to another machine.

That's a key point: Your virtual machine may outlive your real hardware.

I'm gonna guess the difference on VMware is similiar. [Edit: Yep - link]