I've just had the same problem doing an install of Ubuntu 7 from the alternate CD but looking at the syslog after pkgsel fails seems to show my partition sizes incorrectly showing and pkgsel failing because the partion is full (showing 1.6gb 100% used despite my partiton being set to over 40gb). I'm not sure if this is the same as the reported bug but it appears to be a bug with the initial partitioning rather than pkgsel itself. It's definately worth switching to a console and checking /var/log/syslog if you get this error.
I've just had the same problem doing an install of Ubuntu 7 from the alternate CD but looking at the syslog after pkgsel fails seems to show my partition sizes incorrectly showing and pkgsel failing because the partion is full (showing 1.6gb 100% used despite my partiton being set to over 40gb). I'm not sure if this is the same as the reported bug but it appears to be a bug with the initial partitioning rather than pkgsel itself. It's definately worth switching to a console and checking /var/log/syslog if you get this error.