There is a limit of 30 generations that can be stored. Any more would place too much strain on the game's memory. That's why the first generation has to be deleted. In future, when it's time to start a new generation you'll get the same message, and the next earliest generation will need to be deleted.

I'm inching closer and closer to generation 31. Then I will lose Jessania and Cyber from the family tree. I am actually considering pausing the first two games when they reach generation 31. But I will continue playing on files 3-5 which are on generation 12.