In TFS 2005 the SQL Server Reporting Services (SSRS) had to be on the Application Tier and SQL Server Analysis Services (SSAS) had to be on the Data Tier.  With TFS 2008 you can deploy these on remote servers.  This is documented in the TFS Installation Guide in the section titled: "How to: Customize Deployment of Team Foundation."  You can always download the latest version of the guide from MSDN here.