Linode.com have yet again increased members' hdd storage for free (article) and I ended up with physical VPS disk of 20GB and pre-increase partition of 16GB. Most users can resize their disk image in linode dashboard and after reboot VPS will recognize increased disk size and all will be zen.

Screen configuration variable defscrollback controls the length of scrollback for all newly created windows ("def" for default i imagine).

Take care not to set this value too large as screen seems to maintain scrollback entirely in ram. I found out the hard way after setting defscrollback 1000000 which made screen consume over 300MB ram out of maximum 512MB on my VPS.

If you really need to have so much backscroll, consider using screen's logging to file functionality.