Low internal storage, message memory full and sluggishness problems on Samsung Galaxy Y Duos Lite
I use a backup tool (SMSBackupRestore) to save old message on my sd card. Very nice because you can read the backup file to find your old messages. 

I followed the same scheme as yours (I own a Samsung Galaxy Y Pro - GT-B5510). The only problem I still have now is the low ram. Apps are becoming more and more greedy and even the simplest apps need 20Mb RAM and that's too much with all the "Google Services" taking up to 50Mb. So now, I'm trying to find a way to overcome the lag caused by the low RAM.

From what I read on forums, the problem of low space comes from the apps mostly. But messages take space too (I had some problem too) and lag was coming from the messaging app that doesn't bear so many messages. So backup was the only solution for me.