Raman studies are reported of vanadium dioxide grown on sapphire substrates with morphology ranging from island to continuous layer. Temperatures corresponding to the onset of the structural phase transition and the insulator to metal transition are estimated based on the shifts and disappearance of the phonons, respectively. Minimum dimension h, corresponding to island height or layer thickness, plays a critical role in the transformation. The transition temperature and width exhibit 1/h dependence consistent with finite-size effects related to martensitic nucleation. The length scale below which the finite size effects are important is found to be ∼300 nm.