I don't often install Ubuntu server on a Virtual Machine (VM) so I've documented the process here. Usually you can just click "install VMWare tools" and VMWare will complete the process automatically.

Note: I used VMWare workstation 7.0 and Ubuntu 9.10. Once you have Ubuntu Server installed run these commands. 

#Change to super user
sudo su

#Update your sources
apt-get update

#Upgrade your installed packages and force kernel upgrade
apt-get dist-upgrade

Now reboot

#back to super user
sudo su

#Update your kernel:
apt-get install Linux-headers-server build-essential

Now you are ready to install VMWare tools.

#Mount the VMWare Tools CD ISO
mount /cdrom

#Copy VMware Tools
cp /cdrom/VmwareTools-x.x.x-xxxxx.tar.gz /tmp

#Go tmp
cd /tmp

#Extract
tar -zxf VmwareTools-x.x.x-xxxxx.tar.gz

#Change to extracted directory
cd vmware-tools-distrib

#Start the installer
./vmware-install.pl

I used all of the default settings and it works great for me. After a reboot you can use tools such as Shared folders (/mnt/hgfs/).

Reference

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