Since many people have had issues getting the Guest Additions mouse integration to work, I decided to post a quick fix for this. Please refer to my previous post Troubleshooting VirtualBox 2.1.4 Guest Additions for help installing Guest Additions (then come back here if you are experiencing mouse integration problems).
All you have to do is add the following lines to /etc/X11/xorg.conf
Section "InputDevice"Identifier "vboxmouse"Driver "vboxmouse"Option "CorePointer"Option "Device" "/dev/input/mice"EndSection
Then simply restart X by pressing Host+Backspace and your mouse integration should be working.