Carolyn is right. In otrder to change the server collation you need to re-run setup from the command line with the following options

start setup.exe /qn INSTANCENAME=MSSQLSERVER REINSTALL=SQL_Engine REBUILDDATABASE=1 SAPWD=

But be aware that this will rebuild the master and the msdb database. So make sure that you have saved things like logins, jobs, SSIS packages in msdb, etc.

See also http://msdn2.microsoft.com/en-us/library/ms144259.aspx