In client systems (XP, Vista, 7) this is the storage space used by System Restore. And the very much recommended way to clear it is via the Disc Cleanup Wizard>Advanced and then choose "Delete all but the latest system restore points". If that exists in the server editions also, I'd use that.
Deleting the folder definitely is a bad idea, because it's being used by Windows. Windows might fail if it's gone.

Kees