Just installing virtualbox "guest additions" resolved my issue.
This is what I did. (on Ubuntu 10.04)
1. Installed virtualbox-guest-additions on parent/host OS.
2. Then an iso image will be available in /usr/share/virtualbox/
3. In virtual box interface, created Storage Device (CD/DVD) for guest OS with above ISO.
4. Started Guest OS (another ubuntu setup in my case)
5. CD ROM with virtualbox-guest-additions now available in guest os.
6. Open a terminal, change to particular CD rom, and execute
sudo ./VBoxLinuxAdditions-x86.run
7. That's it. Restart the virtual machine
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