SharePoint installation guidance specifies that SQL Server collation should be set to Latin1_General_CI_AS_KS_WS (case-insensitive, accent-sensitive, Kana-sensitive, and width-sensitive). However, our internal hosting group uses the default SQL Server 2005 collation SQL_Latin1_General_CP1_CI_AS. What are the potential issues we might face with MOSS 2007?
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The server collation must be configured for case-insensitive, which is ok in your case.
If you use SharePoint itself to create its different databases, it will set the required collation automatically. However, if you use precreated databases - make sure you to change the collation manually. Otherwise, SharePoint won't even let you use those databases.

Thomas Vochten
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Depends, does your company do anything in non-english?

Wyatt Barnett
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Yes, some of our clients are in Canada, so we support English and French. – MDRoz Nov 20 '09 at 18:20