There are several precaution you must take before you install Windows 7 SP1. One of them is ensuring that you have enough disk space on your computer.
Microsoft has gone on record to make a table of the disk space requirements for Windows 7 Service Pack 1.
Make sure you have enough free disk space to install SP1 even though much of that space will be reclaimed after the installation.
If you need to clear disk space, this post may help you.