If you are like many organizations and apply the Corporate Intranet Template at the root of a web application, self-service site creation will not work as expected. By default, the Site Creation tab under Site Directory allows self-service site creation and can be limited to groups defined by the Portal (Site Collection) administrator. Unfortunately, when creating a site from this tab, new sites are created as http://portal.contoso.msft/SiteDirectory/newsite. It is important to note this is a sub-site and not a site collection.
To configure self-service site collection creation from the Site Directory, use the following steps:
1. Enable Self-Service site creation in Central Administration
http://oss1:29529/_admin/ConfigSSC.aspx
2. Modify Site Settings under http://portal.contoso.msft/_layouts/SiteDirectorySettings.aspx
3. Check Create new site collections from Site Directory and OK.
You know have the ability create site collections, from your Portal Sites Tab, under the /sites managed path. E.g. http://portal.contoso.msft/Sites/newsite
Enjoy.
-ben