With the recent PSP Firmware update (v5.00), a few bugs were found on the system, notably when downloading from the PSP PlayStation Store to large Memory Stick PRO Duos (8GB or 16GB), which reports that you don’t have enough free space available. As a result, Firmware v5.01 is now available to download to fix the problem. A message on the PlayStation.Blog confirms that the update will fix the aforementioned bug.
"PSP firmware update 5.00 added direct access to the PlayStation Store, and we’ve since found an issue related to larger-capacity Memory Stick PRO Duos, which we’ll be addressing with a new update (5.01). When downloading content from the Store to a PSP with an 8 GB or 16 GB Memory Stick Duo media inserted, you may see a message indicating that the media does not have enough free space, even when sufficient space exists."
You can download the update using the Network Update feature from the PSP [Settings] menu.