That is called penile tumescence, and it's completely normal. In fact, erections happen several times a night during REM sleep. Since we typically wake up at the end of a REM cycle in the morning, it's also typical that men find they awake with an erection. Blood flow is necessary to maintain tissue health, and when that blood flow enters the penis, it causes the tissues to swell, hence an erection occurs. It doesn't usually mean that the man is actually aroused, however.