Go into manage applications, sort by size, see if you can Clear cache on some of the apps. Sometimes they have crazy amounts built up over time. That's a web cache for apps which have embedded web views in them.
No it wont prevent it from updating if you have less than 77mb of space on internal memory on the phone.I asked about the same thing because I had only 45mb space on my phone and this is what i got from Verizon support via Twitter
VZWSupport@xxxxxx During the update process the update will wipe the internal memory on your phone so you will have space. *AN