“Insufficient storage available”. Ok, but where?
A common problem on android devices is that android will keep and safe all applications which are in your system directory (system apps/apps installed from the factory). This is exactly the same problem I had with my Sony Xperia arc s. 

I've fixed this by rooting my phone and install "system cleaner root" (note: only rooted devices can use this app and you'll probably lose your warranty when you root your phone) and run that application. It will search for saved update files on your phone which are system apps, and then delete these old update files. 

The problem should be fixed. As long as you run "system cleaner root" once in a while.