I'm getting the same message. I have over 7GB available on the iphone, yet the message says I need 5.14GB free to sync. I've unchecked the auto sync features, and unchecked the sync music box to try to remove the music library and then reload it. When I tried to sync, none of the music was removed. Restoring the device didn't help either, as I backed it up before starting the sync.
(As an aside, I have an easier time syncing my older ipod than the iphone. I can even get all of my music on the ipod, whereas the phone doesn't recognize any music files I've purchased or dowloaded outside Amazon, iTunes or a ripped CD. I just don't want to have to carry two devices when I'm exercising.)
I then removed the cord and reattached, and the same thing happened. Using version 7.1 on the iphone 5 and 10.6.8 on my MacBook Pro. Any suggestions are greatly appreciated.
Thanks.