My Windows PC is having 1GB of RAM. Because of the huge memory demands of SureFit and Caret (but I'm sure it also helps with large AFNI datasets) I allocated 800 MB for the guest OS (Mandrake Linux).
I'm using Network Folders to communicate with Windows, but the new VMWare 4.0 (I'm having 3.1) is offering shared folders, with I haven't tried yet.
As my machine is having 2 harddisks I assigned one of them physically for Linux (data), since especially SCSI disks seem to be faster in native mode. However, my Linux system disk is a relatively small (4GB) virtual disk. It turned out that it's more convenient to have it this way for backup of the Linux System under Windows. I used to mount the Linux disk with Paragon Ext2FS onto my Windows machine to backup the disk, but restoring backups only restored data without linux special files and flags. That's mainly why I'm only having data on the Linux disk and having the Linux system root on a virtual drive, which is backuped as a file.
If you are using physical drives for your guest OS, do NOT mount this partition on the host OS (if it's automatically mounted, unmount it with the Disk-Manager), otherwise you might end up loosing data or completely screw up your disk!