How to get rid of bogus "Phone storage full" message (cannot send SMSs)
We had this issue already a couple of times. To get rid of that insufficient storage available message, you need to have at least 25MB free available internal storage (source: TechniPages, AndroidCentral). To achieve this, you can...


delete apps you no longer need
move apps to sd if possible
clear app caches


See also:


Why am I getting a “Low on Space” warning and having other weird problems?
What can I do to manage my phone's internal storage?
I can't receive SMS when I have low storage
HTC Incredible says SMS storage is full, but it isn't
How can I get rid of the low disk space notification?
My internal storage capacity is running low, what can I do?
Message Memory Full, Incoming message rejected