Why am I getting a "Low on Space" warning and having other weird problems?
first thing you should check is if you can move large applications to SD. 
Go to 


  Settings, Applications, Manage applications, All


There you can select applications and check if they can be moved to your SD card.
After you've moved some applications to your SD card you will be able to install other applications and get back the functionality you've been missing.

A similar question to have a look at is question 5519