Following the release of Firmware 5.0 for PlayStation Portable recently, those with memory sticks larger than 8GBs have reported difficulties while downloading from the PlayStation Store.
The problem itself boils down to the fact the firmware update is unable to recognize the ample amount of space available, and therefore concludes there is insufficient space.
However, according to a post on the Official U.S. PlayStation Blog, Sony is currently working on a fix and should be releasing 5.01 shortly to correct it.
Stay tuned.