I am getting this error as well. It doesnt appear that the space required is the problem but it is something else. I don't really know where to go from this point. Any further ideas would be appreciated.
The same error occurs and 2 new directories are created in /tmp with the ipkg-[random letters] directory which have 2 files in it - control.tar.gz and data.tar.gz
The other directory created is "ipkg-intercept-[random letters] and has no files within it.
Thanks in advance.