iTunes crashes in iPhone sync. Not enough space

When trying to sync my iPhone with iTunes, the first several steps succeed, then am]n error message appears stating there is not enough space to continue. As soon as I click on the iPhone icon on the left, iTunes "unexpectedly quits"

Ther appears to be sufficient space on the hard drive and free space on the iPhone.

I am trying to restore to the last successful backup, (presumably there was sufficient space with that configuration), but as soon as I right-click to get to the restore command, iTunes crashes.

Any suggestions??

JD