When you create a new Virtual Machine, you can chose how large you want the hard drive image to be - it should be one of the options in the setup screens. If not, there's usually an advanced configuration option at the end where you can adjust the hard drive size (sorry, can't be more specific as I've been using VMWare Fusion for a long time, but setting the HD size should be pretty obvious).
I believe the default is 40GB.
Edit: The option is "Customize settings before installation", and it's on the last page of the setup assistant. The Hard Disk settings can be found on page 191:
»www.parallels.com/fileadmin/para ··· uide.pdf--
University of Southern California - Fight On!