What you bought was iCloud storage - additional space in your iCloud account on Apple's servers.
Your device's storage cannot be upgraded - it is limited to whatever you originally bought - 16GB, 32GB or 64GB.
To free up space on your device, you will need to delete things on it. For example, transfer your photo's to your photo management software on your computer and then delete them from your camera roll. Or delete apps you do not need or use. Or delete music you have backed up on your computer and no longer listen to, or pdf's you have already read, or podcasts you've already listened to. But the only way to free space on your iPad is to remove some of what is currently taking up space on it.
You can also try plugging your iPad into your computer and use iTunes to update, as that will require far less space on your iPad since the download goes onto your computer and is run from there.
Thank you, Michael for a quick and thorough answer. So I spent $20 for nothing. Oh, well. I did delete programs, and I still got the same message, but will go ahead and take off the photos. Good idea. The message I got told me either to delete apps from the device OR buy storage. I deleted some apps but it didn't seem to be enough, so I bought the storage. It shouldn't be giving me that option if it doesn't work. I feel taken.
Thank you for your help.
No, call Apple within 15days of signing up for the upgraded iCloud storage and they will cancel it and refund that fee.
Or follow the instructions here to downgrade (undo your upgrade) - http://support.apple.com/kb/HT4874 <edit> Ignore that, to cancel and get your full refund, you will need to call Apple.
Thank you, Michael. I may do that. Now I have another question. I never moved my photos before. I put the cord in the iPad and plugged it into my pc (Windows 8). I went to the device in "computer" (used to be "my computer" I think) and found the pictures but I don't know how to transfer them. Do i have to check each little box then do something? Or can I transfer them all at once? I don't know how to get them to "pictures" (used to be "my pictures" in Windows 7--sheesh they had to change so many things with Windows 8) Anyway, I'm used to automatically something popping up when I plug in my iPhone to transfer pictures. That didn't happen here. Thank you.