you guys need to understand on how "space" works ill try to explain it best as possible.
you have a windows computer witha bunch of hard drives in it, lets say 160gb is your c:\ drive. 160gb is your spare drive. well you think to yourself lemme free up some space on my c:\ drive by installing all of my programs on the spare drive (d:\) as well as all my settings so taht way just windows is on c:\....
so now you have all those programs on d: you keep downloading and installing apps... but youve got 160GB's so all is cool right? well as it turns out windows update... decided that your c:\ drive was a little full so all updates now go to your d:\ drive. so now you have your settings, programs and updates all on d:\ (which is where the market installs apps).
yet get a warning "whoa dude youve got low memory, cant install anymore programs!!!" so what do you do? you go to c:\ and think well hell i nbever use internet explorer... ill get rid of that, so now you freed up a bunch of space right?
nope. sorry you got some space on c:\ but that isnt where you are installing things... so it doenst even matter really.
the biggets issue you guys have is the google apps... like maps which is a fairly large program, and gets updates quite a bit you actually have two copies of it. one in /data/app (where market installs apps) and in /system/app (what came preinstalled on the phone) now you dont get to see how much space is available in /system/app so its just a guessing game.. you wanna free up space get the latest apps and put them in /system/app
this is also why.. when you root putting su and superuser.apk on your c:\ drive doing a factory reset, doesnt change that... as imagine a factory reset formatting your d:\ drive..