When using SPS 2003 some of the business coordinators requested a way to allow users to manage permissions whilst not being able to create a new sub-site. This was not possible out of the box as the administrator role allowed the user to create new sub-sites as well as manage permissions.
In MOSS 2007 this is now possible by ceating a new site permission.
1. Go to Site Action Menu.
2. On that menu, go to Site Settings.
3. Choose People and Groups
4. On the quick launch bar, there is a link to Site Permissions.
5. On the Settings menu, select Permission Levels.
6. On the Permission Level page, select new to create a new permission level.
7. Add the permission that you want (in this case, Manage Permissions but not Create Subsites).
8. Name it Permissions Manager
9. You can now assign users to that permission level