Hi Guys,
I just wanted to add - and you can get this from the whitepaper - a Team Foundation Server license includes the provision of "A restricted-use version of SQL Server Standard Edition is included with Team Foundation Server, which is installed separately.".
However, as Ray has pointed out - it's for SQL Server 2005. AFAIK this hasn't been updated with the release of Service Pack 1.
Edit: Checked with a contact @ Microsoft - the license was not updated with Service Pack 1 (though it was considered). In other words, a separate SKU for SQL Server 2008 can be purchased and used with TFS, but the Restricted Use SQL license attached to the TFS license remains only for SQL Server 2005 (which is shipped as part of the TFS product materials).
As to the advantages of SQL 2008 with TFS - It's all about BI. There have been complete refactoring of the Analysis Services, Reporting and Integration services so you can do a lot more with regard to reporting on TFS data.
There are some Database Engine changes (such as compression) but nothing I'd really think of that is an integral upgrade over 2005 (in the TFS context).
Hope it helps..
Rob