Hi,
Dynamics CRM 4.0 will work on any SQL Server 2005 64Bit (Standard / Enteprise / Developer) and also on SQL Server 2005 Workgroup, all with SP2. If you want to use the Workgroup edition, you may use it only when CRM is installed on Windows Small Business Server.
SQL Server 2008 Standard or Enterprise are not listed as supported database engines for CRM 4.0 in any documentation so far, but CRM installs and works fine on both of them. SQL Server 2008 is generally a better option, because it is simply a newer system, performing faster and working better
.
Kind regards,
Kuba