Not tired of helping, but surprised at what you have reported.
Take it you're on Kies and it says you have an update?
The existing firmware should just be reflashed with the ICS - it should not be a matter of needing more space.
If still a problem there are other ways of getting ICS on your phone, but to give best advice we need to know your existing firmware.
In your phone dialer put in this:
You will be shown 3 entries, can you tell us what they are?