It is a file size limitation and not a limitation of tar. AFAIK tar has support for large files (i.e. >2GB). cpio would also have the same problem.
BTW what distribution and kernel are you running?
I quick search found the link below. You should be able to change the size to fit your needs. I do not know if it works or not.
tar czvf - source | split -b 650m tarpiece-
...should create files tarpiece-aa tarpiece-ab tarpiece-ac...
To reassemble, copy to disk, then:
cat tarpiece-* > file.tar.gz
...will reassemble the tarfile.
or this might work:
http://www.informatik-vollmer.de/sof...split-tar.html