> I know that this is not because of web2py, but I am getting an error 
which says "No space left on device"
> Is it because of no space on disk or can be also something else?

Perhaps this can help:
http://stackoverflow.com/questions/6998083/python-causing-ioerror-errno-28-no-space-left-on-device-results-32766-h

It says you ought to look for filesystem issues like number of files, 
folders or file size limits.

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