Well unless you have backtrack set up to boot from the iso each and every time then you should have a virtual hard disk that resides somewhere on an actual HDD (this may be the one in your laptop).
So in that case when you upgrade then the data will be saved on this virtual drive. The drive size can either be set with the vmware software and or the .vmx file.
You should read up on how virtual machines works so you have a better understanding of it.



