/dev/mtdblock4 on / type jffs2 (rw,rpsize=1024,rpuid=0,rpuid=30000)

That shows us you are booting the device from the internal flash which has 250 MB (compressed) and you have used most of it!

You can not use application manager to remove apps so maybe you have to remove some files to make app mgr working again.

If you have installed canola then do this:
$rm -rf .canola
(there is a dot (.) before canola)

Then try to run app mgr again (2MB left is very very low on the memory) to remove some apps you don't really need.

After this, you should consider to boot the device from the internal SD or the external SD not from the internal flash.