Payal K --
I ran into this very issue when we were authoring our "Managing Enterprise
Projects..." book on Project Server 2007, and documented this little oddity
in the book. I know no way around it other than giving administrator
permissions to your PMs for their Project Workspaces. Perhaps a SharePoint
expert would care to comment as well. Hope this helps.
Dale A. Howard [MVP]
VP of Educational Services
"We write the books on Project Server"