SYSDBA does not have privilege to create user

I have a fresh Oracle Database 11.1.0.7.0 installation.
I am able to connect to the database using either of the following commands from Linux :
sqlplus "/ as sysdba"
sqlplus "sys/pwd as sysdba"
But after I connect, I am not able to create user. Following command gives me error:
SQL> create user adi identified by adi;
create user adi identified by adi
ERROR at line 1:
ORA-01031: insufficient privileges
SQL>
My assumption was that sysdba role has unlimited privileges, then why does the database throw this error.

Hmmm....
Is the database you are using the one that you can create during the software installation?
If so, the first thing I would recommend is to use DBCA and drop that database.
It is a play database, and not configured for much of any real purpose.
Aside from that, it could be anything, but it obviously shouldn't happen.
When you (normally) create a user, you would specify a user, password, default tablespace, adn temporary tablespace, then quota on the default tablespace. Next, you would grant roles and privileges accordingly to meet your needs.
The problem with the play database is that you may not even have any tablespaces besides "SYSTEM" to create the users, and you wouldn't want to put them into the SYSTEM tablespace anyway.
Back to my recommendation: use 'dbca' and drop and recreate the database using an appropriate template (or customize it yourself for your needs).
Hope this helps.

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