It means that the player has run out of memory (RAM, not disk) which is odd. Try this update and see if it helps:
http://www2.empeg.com/upgrades/test/interim/private/developer-beta9c+.upgrade

This version seems to work better - I've uploaded couple of CD's to my empeg without that particular sync error. Once I got some other sync error though, but I recall loading some other program in background at that time, so no worries about that.

When a sync error happens, the most annoying thing is not that the sync aborted, but the fact that it usually puts all synced files to "Unattached items" folder. Maybe it could try to assign tunes to playlist after each file is uploaded. Also as an wishlist item, the sync dialog could have a Cancel button :)

Kim