Let me apologize in advance if this has been covered in another thread. I did a search and nothing concrete came up.
My wife's rooted Incredible has been suffering from the dreaded "Low on Space" warning for months now. After several different roms - all the same result. Clearing Facebook data as well as messages usually does the trick...for a while, but the message always returns. After some research I've learned that the message is caused when the data/data folder becomes filled. This folder is limited to 150mb, which fills up extremely fast. So, essentially when you check your phone's storage and it says you have 600mb+ free, that's not actually the case. Why are we limited to 150mb? Not sure, but it's definitely a design flaw and HTC knows it.
Anyway, I've continued to keep my eyes open around different forums in search of a fix for this and I finally found one. An awesome developer over at XDA came up with a permanent fix, as long as your rom and kernel meet the requirements. Good luck to all and please check it out here: [MOD] Ext4 4 ALL! Gingerbread AOSP + GingerSense Update: 10/27 Normal dalvik fixed - xda-developers