Step 1 - Cleanly shutdown the Virtual Machine
Step 2 - Resize the Virtual Disk
In Fusion for the Mac, this is just a question of going to the setting panel and adjusting the slide for the Disk capacity (Virtual Machines > Settings > Hard Disk).
If you are using one of the myriad of other VMWare products, one reliable way is to usevmware-vdiskmanager. This provides a mechanism to resize the virtual disk through the command line.
Step 3 - Re-partition the disk
You will need to download our use your favorite partitioning tool. I have used gparted successfully.
Using the gparted ISO disk image, its a simple task of mounting the image in the CD/DVD drive and then rebooting. Move the partitions around in order to utilize the free space in the virtual disk
Step 4 - Reboot
After you have created the free space for the O/S, reboot and you are away!