This is cleary a max_upload issue. You are trying to upload a theme with a size bigger then the size allowed. In this case you have two solutions:
1) Use FTP in order to upload you new theme. You got to wp_content\themes and you upload the unzipped folder there. You will then find it in the dashboard.
2) You increase the maximum upload size and you try again. For this you have a lot of lot of possibily, you may read this to learn how.