Yep that's out of space filesystem full - check "df -k" to confirm which filesystem, in case not /usr, then:
chfs -a size=+1 /usr  (or whatever filesystem it was that was out of space)
and try again - assuming you have enough free partitions to allow this increase in allocation,
and as disks are so cheap and large these days, dropping the old mantra of space management.

You can choose individual things from the F4 list in smit, F7 to pick each one you want.
Or there are options for installing software in bundles and whatever else - very unclear
then as to what you're getting.   As a general rule I would never install ALL as in everything,
and only pick what you actually need to install.

/usr/sys/inst.images is intended for pre-load s/w, normally it's part of the /usr filesystem.
You can empty that out if you are finished with it, having installed all you need from it.

It makes sense to backup, remove and re-create /usr/sys/inst.images as a new filesystem,
which you can then increase the space for as you wish without touching /usr.

You can put newly downloaded S/W files in any directory or filesystem
- e.g /tmp or some other new filesystem.

In the S/W files directory run this command to create the index .toc file for "smit installp" to use:

# inutoc .

That's dot for current directory, assuming you've changed into it of course.  Then "smit installp" and
for the installation directory also enter "." dot.