There are a couple of options.
1) move data off the virtual disk to the windows partition(under /host). This is the easiest and should work since a lot of the 17GB is likely multimedia files. If it's not maybe you have a problem since 17GB is a lot of data. You can run the disk usage analyzer - enter "gksudo baobab" - from command line to see where the space is being taken (stop it the first time it runs, and go to preferences and deselect the windows host or it will take forever). This will show what's taking all the space.
2) You can create a new virtual disk for /home. The wubi guide has a script - I can't vouch for this but I haven't heard of problems with it.
3) There is a utility for resizing the root.disk - in fact it just creates a new root.disk (it's part of lvpm). I don't recommend this as lvpm is out of date and there are some complications. I'm working on a updated script to do this, but... I'm not sure it's a good idea anyway. Basically, say you wanted to go to 30GB, you'd need to create a new file of 30GB, copy the 17GB to it. Only after it's booted ok can you free up that 17GB.
4) Personally, I'd just create a 30GB partition or more, and just migrate the wubi install to it:
http://ubuntuforums.org/showthread.php?t=1519354
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