Cloning and converting virtual machine disks with vmkfstools

vmkfstools -i <input> <output> -d <format>

Convert HD type to thin-provision
1. SSH to VM host.
2. Shutdown the virtual machine.
3. vmkfstools -i "guest.vmdk" "new_guest.vmdk" -d thin
4. Add new HD and point to the "new_guest.vmdk" under "Edit setting"
5. Power-on the virtual machine.
6. Delete the "guest.vmdk" file.

http://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=1028042