TFS 2005/2008 both ship with the TfsDeleteProject.exe utility.
Open a command line on your team foundation server and cd to
%program files%\Microsoft Visual Studio 9.0\Common7\IDE (2008) %program files%\Microsoft Visual Studio 8\Common7\IDE (2005)
Then:
tfsdeleteproject /q /force /server:<tfs server> "<project name>"