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I have a VPS account from knownhost. I have clients who have their website hosting on my server.

Some have subscribed 50MB, 100MB, 500MB or 1 GB as per their requirement. They are also allowed to create email address in their accounts but the email address's capacity will be shared with web site's space.

Now I would like to separate that web hosting space and email account's space.

So What is it called and from where can i start?

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Unless the web host provider you use offers some type of email service, when you offer hosting through a VPS you are generally going to be sharing web hosting and email on the same server (using the same space). If you want to break it up you will either need to get another VPS or dedicated server just for email, or have your customers use something like Google Apps for their domain email. Using Google Apps may be a good option since it would allow you to move a customer's website to a different server if needed without affecting email service. If there are only a small number of email accounts, there is a free version available. For the power email users, the cost for the paid version is fairly minimal per account as well.

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