A common scenario while using a system used by some one else who earlier used the same TFS workspace.
You need to be either the owner of the workspace or have the Administer workspaces permission on the Team Foundation Server to perform this.
Open Visual studio Command prompt at
C:\Program Files (x86)\Microsoft Visual Studio 10.0\VC
tf workspace /delete [/server:servername] workspacename[;workspaceowner]
workspaceowner – other username or yourself
workspacename – Workspace name including the Computer Name
A GUI based free Team Foundation Sidekicks tool by Attrice Corp can also be used.