Thanks for all the replies..
I went and done some of the things on "Free up rootfs space" wiki and yes, I'm left with 10mb.
Very silly limitation. Does anyone know what the increase will be when 1.2 is out (or on the Beta copy)?

I'm not even sure why you would have programs running from there.. Seem's very weird. I thought that rootfs is a firmware partition. Like iPhone's firmware partition.