Yes, its an old known "bug" on certain games like Prototype, Ratchet & Clank etc on ps3, way before all this Jailbreak stuff.
Originally Posted by chris_avfc
What you have to do, is install or uninstall something that uses about 700mb. If the game detects theres been a change of around that size, it will recognize enough free space again.
Just install some game or remove one, try it again and it will work
Sony PSP Phat 5.50 Gen D2 + 16gb Duo.
Sony PSP 2000 5.50 Gen D3 + CR-5400 2x8gb c4
Sony PSP Go 6.20 (TN-B) + 16gb M2
Sony PS3 Slim 3.41 (500Gb) + Maximus AVRUSB