The quota feature is disabled by default in Windows SharePoint Services —there are no default quota values or templates. You can implement a virtual server level quota, with multiple quota templates and you can also edit an individual site quota.
How do I get about editing individual site quotas. Heres how.
SharePoint Portal Server Central Administration –> SharePoint Portal Server
Under Portal Site and Virtual Server Configuration
Configure site quotas and locks from the Virtual Server List page –> Manage site collection quotas and locks
In the “URL of top-level Web site: *” enter the site url, for eg http://servername/sites/sitename
This point is ridiculous, but don’t include the trailing slash “/”, leave it just sitename, else there is an error. Furthermore if your portal dns is SERVERNAME.LOCAL ; try just using SERVERNAME in the url above, may save you some trouble for error screens.
Under the “Site Quota Information”
Let the Current quota template be “Individual”
Check the boxes for Limit site storage & Send warning email and update the values as you like. Let users react to the warning email and to give them some time I set the warning email to 90% of site storage.
This page will also display in the bottom “current storage used”, so you can estimate how much they want more. Dont just add 100%, make a reasonable guess. If they are using 200MB, dont just increase it to 400MB. Ask questions, have a process, etc.
And you just made another user a very happy person.
Here is some more information on Configuring Site Collection Quotas and Locks from the Microsoft Site.