Db2 SQL0930N error on linux – not enough space to process this statement

This is another newbie question on db2, related to space.
How to I start diagnosing and then solving what the problem is so that users can connect to this database?
This error is displayed when both connecting to an existing database as well as when creating a new database.

db2 => list database directory

 System Database Directory

 Number of entries in the directory = 1

Database 1 entry:

 Database alias                       = SAMPLE
 Database name                        = SAMPLE
 Local database directory             = /home/mylogin/sqllib
 Database release level               = f.00
 Comment                              =
 Directory entry type                 = Indirect
 Catalog database partition number    = 0
 Alternate server hostname            =
 Alternate server port number         =

db2 => connect to sample
SQL0930N  There is not enough storage available to process the statement.  
SQLSTATE=57011
db2 => !uname -a
Linux myhostname 2.6.32-131.0.15.el6.x86_64 #1 SMP Tue May 10 15:42:40 EDT 2011 x86_64 x86_64 x86_64 GNU/Linux
db2 => create database newdb
SQL0930N  There is not enough storage available to process the statement.  
SQLSTATE=57011
db2 =>