Just experienced this issue myself cloning a VM to another LUN / Datastore on a slightly older vSphere 4.0 update 1 environment. A quick google of the error message “Cannot clone VM-NAME1: Number of virtual devices exceeds the maximum for a given controller.” pointed me to VMware KB Article: 1016221 which clearly states that this is an issue when you select the “Edit virtual hardware (experimental) checkbox in the clone settings wizard.
Here is what the Tasks and Events section reports (blanked out the VM name and a host IP if you notice the missing parts).
To work around this, just make sure you don’t tick the “Edit virtual hardware (experimental) checkbox when you clone the VM. Edit the hardware after your clone has complete in the usual way. Apparently this occurs on both vCenter 4.0 and 4.0 update 1. Just another reason to move to vSphere 4.1 if you are still on 4.0!