Mine refused to install with 33MB free (and displayed a cryptic "Not enough storage space in target location" error message - Nokia really has to work on their error messages).

It worked fine with 40MB free. IIRC, all I had to do was to run an apt-get clean to free up some space (had already disabled extra-testing and extra-devel).

Check out http://wiki.maemo.org/Free_up_rootfs_space for a few tips on how to free up some space.

Interestingly, after having installed PR 1.2 (OTA) I ended up with 65MB of free space in rootfs.