Running out of space on your VMWare Server? Try this to convert some of your larger preallocated disks to growable. This way they only consume the space on the disk that they currently need, and will not consume disk space on the host drive for disk space on the guest systems whic is in fact [...]

This is a known bug inherited from RedHat.
http://rhn.redhat.com/errata/RHSA-2009-0225.html
Workaround is to add
scsi0.virtualDev = “lsilogic”
to the .vmx file before installation.