Yes, it is possible to resize MorphOS SFS partition. Just run the system from CD, use HDConfig to change (extend) the size of the partition (you need to prepare some space after the partition first), reboot, start system again from CD and use SFSDoctor to fix the resized partition (select it from the partition list, push 'Scan disk' button, then 'Repair' button and follow the instructions).
After reboot the resized partition should be fully usable again. Happy hacking! :)

PS. Me as well as The MorphOS Team takes no responsibility for any data looses. Make sure that you have made a backup of all important data first.