In Windows Vista, the storage problem has gotten even worse, because Vista now has found a way to bloat even System Restore. The new feature is called Volume Shadow Copy Service (VSS), which enhances System Restore by making backup copies of deleted or changed files. Most of these "shadow copies" cannot be deleted: they just take up space for no reason whatsoever.
Fortunately, there is a command line utility that will allow you change the amount of space Windows Vista uses for Restore Points and Shadow Copies, and is called the vssadmin.exe (Volume Shadow Copy Service Admin). Read more at OCModShop.