Reading this response, I was a bit confused. Here's another explanation of how disks work in somewhat different words:
First, disks in a VM are virtual disks represented by a file in the host OS. they have the extension .hdd in the VM folder on the HOST disk. You can have as many of them as you have room for on your Mac, and can connect up to three of them at a time to your VM (unless you give up the CD drive, whence you can connect four virtual hard disks). These represent emulated physical hard disks.
Each of these virtual disk drives can have as many partitions as your guest can create and handle since the format of the virtual disk is completely under control of the guest.
Using Windows, you can create at least four partitions on EACH virtual disk, and format them with the FAT32 or the NTFS filesystem. Each partition can be anything from the minimum size allowed by the guest, to the maximum size allowed by the guest or the total unpartitioned space on the VIRTUAL drive whichever is less. You set the size of the virtual drive when you create it or change its size with the disk image tool.
Changing the size of the virtual disk with the image tool is the equivalent of changing the physical size of a disk in a real machine, and has nothing to do with the partition size (which does not change). If you expand a virtual disk, you can use the space either by expanding the existing partition (or last partition if there is more than one) in a separate step using a third party tool, or by creating another partition using either file system (which does not have to be the same type as the existing partition), and assign it another drive letter and use it as another disk. Setting up another partition using the newly created unpartitioned space is the same as doing the same thing with a real physical disk on a real machine.
Another approach to getting more disk space is to create another .hdd file and attach it to your VM. This is the same thing as adding a physical disk to a real machine. You can create one or more partitions on the new disk and format them with any file system you like. One advantage to a second .hdd is that you can back them up separately. Another advantage is that damage to one .hdd file may not affect the other.
If you decide to expand a disk image, and expand the single partition inside it, you can do this with either FAT32 or NTFS. You do not need to convert to NTFS to expand a partition. To do this, download the GPARTED live CD from
http://gparted.sourceforge.net/download.php
Attach this download as a CD image, and boot from it. Accept all the defaults, and follow the on screen instructions. Expand your partition. Then disconnect the CD, reset your boot options to hard disk, and you will have a nice new enlarged partition.
BE SURE TO BACK UP YOUR .HDD FILE BEFORE YOU START.
Have fun.