I have just managed to update to the new ios 8 with a iphone 43 8gb, although there wasnt enough spare storage. The apps that would have needed to be deleted in order to do this would have been just about everything, so wasnt happy to do this.
I tried to update using itunes and it froze my phone leaving me withan itunes logo and a charging plug image on screen and i couldnt get rid of it, the phone wouldnt work at all.
after some research i followed a recommendation as this fault was an itunes issue. I uninstalled itunes and reinstalled it again, connected the phone again and chose update. Itunes didnt recognise the phone but started to update, after 30 mins fingers x, it had completed update to ios 8 and was working fine. Once it had installed the update it then recognised the phone. The phone is using ios8 and has the extra bonuses.
My only thought to this would be due to itunes not recognising the phone at all, so didnt pick up how much storage was on the phone. There was no where near enough storage and the phone is working perfectly.
So to all the phone shop that told me it was impossible, they were wrong.
Hope this is of help to someone.