The man page for largefile does say that tar is largefile aware, so I guess you should be able to tar a larger file. Other Unix systems don't support large files for tar.
Are you tarring to another file or to a tape? If you are tarring to another file, perhaps you are running out of room in your filesystem? or the filesystem isn't large file enabled (if there is such a thing in Sun)? Are you doing this as root? Can all users create large files?