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I am not sure of this, but it seems that when the installer calculates ohow much disk it will need, it ignores the sizes of the already-existing installation. At least when I tried to upgrade RH5.0 to 6.1, and had 1500M forthe root partition, filled with some 900M of old installation, it complained it needed 138M more. I find it hard to believe upgrading a simple server would require 2400M root disk...
This issue has been forwarded to a developer for further action.
Disk space calculations were improved in the latest release, so you should see better estimates in the next release.