Thin provisioned disks grow as required by the guest, but do not automatically shrink. One option to shrink thin provisioned virtual disks is to zero out unused blocks within the guest OS itself (using e.g. sdelete for Windows), then power off the VM and run vmkfstools --punchzero VM.vmdk to reclaim the zeroed out disk space. (see e.g. http://www.yellow-bricks.com/2011/07/15/punch-zeros-2/)
André