VM /ETC has a great article that helped me while onsite to perform an upgrade of the vCenter SQL database from 2005 express edition to a licensed version of SQL 2005 (in my case it worked on SQL 2008).
Normally, using SQL Express for the vCenter database isn't a bad thing necessarily, however as VM /ETC mentions in his article, VMware only supports SQL Express as the vCenter Database if your VMware environment is 5 hosts or under, 50 virtual machines or under. Also of note is that SQL express databases can only get to 4 GB in size, so if your database is getting that large, then you'll need to upgrade for that reason too.
Here's the link to the VM /ETC article:
http://vmetc.com/2009/01/11/how-to-upgrade-the-virtualcenter-sql-2005-express-database/
Here's a copy/paste from his article for easy reference:
VM /ETC's article also has links if you want to move your vCenter Database to another SQL server and if you want to move databases between computers that are running SQL server.