Please note that the "not enough space" is referring to the machine running out of disk, not CPU, so increasing the machine type wouldn't help with this issue.
In order to increase the disk size, you would need to go to the VM details in the Google Cloud Console (clicking on 'Manage in the Google Console' in the Launchpad). Then in the
Boot disk section, click on the VM disk to inspect its details. Finally, in the top bar, click on
Edit, which let's you change the disk size to a higher value, and then
Once it finishes updating the disk, reboot the VM for the disk to be expanded to use all the available space.
Could you check if the above works for you?