Using vLite, you can reduce Vista's footprint on disk by 50% or more. That still won't make it as small as XP Pro, but it is a grand start. Of course, that begs the question of whether or not Vista needs to be as small as XP Pro on disk, but evidently some folks think it at least needs a starvation diet for a while.
The appearance of vLite is just the first page in this story. I predict there will be several more tools available to do similar modifications on Vista before long. Microsoft also is saying they will make succeeding versions of Windows much more modular to allow installation customization, though as this needs to be done at the installation and MS is now restricting the number of installations one can do under their activation scheme, this may benefit only those who buy the top version(s), which plays into Microsoft's hands, rather than serving the consumer.
We will be following this one.