I would like to know the best method for compressing and storing virtual machines

Method 1: Using VMWare Converter:

1. Turn off the virtual machine;
2. Start the VMWare Converter application;
3. Open the wizard;
4. Select 'standalone virtual machine' as the source and destination system;
5. Choose 'Select volumes and resize to save or add space';
6. Enter a new size and voilá, you're done!

Some say that the expand process is slow and that VMWare Tools might need to be reinstalled.

Method 2: Using the VDiskManager:

1. Turn off the virtual machine;
2. Commit/remove all the snapshots first! (I forgot to mention this, thanks JimO)
3. Open a Command Prompt and go to: C:\Program Files\VMWare\VMWare Server or C:\Program Files\VMware\VMware Workstation
4. Run this command to expand the virtual disk: vmware-vdiskmanager -x 12GB "My harddisk.vmdk"

5. Note: Because this only expands the disk and not the partition, you'll need to resize the partition table as well. This can be done by 3rd party tools like 'Partition Magic', but also with 'diskpart.exe', a tool of Windows. In my case, this disk is bootable, meaning that I can't run diskpart on the virtual machine itself. I used another virtual machine, running Windows XP. It also works with the Windows 7 beta 1, but it fails with Windows Server 2003.

   Add the increased hard disk to a second virtual machine;

6. Power on this 2nd virtual machine;

7. Open a Command Prompt and type: diskpart

8. Type: list volume Remember the volume number (#) of your volume!

9. Type: select volume <volume number> (the number from step 8)

10. Type: extend

11. Turn off this 2nd virtual machine and remove the hard disk from the virtual machine configuration. This won't delete the hard disk from disk;

12. Finished! (Windows automatically recognizes the new and correct disk and volume size)

Thanks for Leon Meijer.

Umm I don't think VirtualBox disk images (.vdi) can be mounted under a VMware utility, unless I'm missing something.

The .vmdk files are VMware disk files, which as of v2.1 VirtualBox can use (but it can make breaking changes to them that prevents them working on VMware again.)