What to do when Database fills up disk?

Both options are plausible.
If you choose the option

copy it onto a larger disk and continue using it as is,

be aware of the validity and consistency considerations (mentioned in Database migration from v4.5.3 to 4.5.7 - #2 by wtempel).

For the

option, are you considering installation and operation of an additional CryoSPARC instance, or the replacement of the existing CryoSPARC instance?